INSURANCE  LAWS 


STATE  OF  CALIFORNIA 


Compiled  by 
E.  C.  COOPER,  Insurance  Commissioner 


SAN  FRANCISCO 
1914 


California 
State  Printing  Office 

1914 


fjancrc  **¥ 

PRINCIPAL  REQUIREMENTS  AS  TO  INSURANCE  COMPANIES 
OF  OTHER  STATES  AND  FOREIGN  COUNTRIES 

Desiring  to  Enter  the  State  of  California  for  the  Transaction  of 

Business. 


All  capita]  stock  fire,  marine  and  life  companies  must  have  an  unim- 
paired paid-up  capital  of  at  least  $200,000.00. 

A  fire  insurance  company  may  transact,  in  addition  to  such  kind  of 
insurance,  marine,  sprinkler,  boiler  and  machinery,  automobile,  and  mis- 
cellaneous. Marine  insurance  companies  may  transact,  in  addition  to 
such  kind  of  insurance,  only  fire  insurance,  team  and  vehicle,  automobile, 
and  miscellaneous.  Each  of  such  companies  must  have  such  unim- 
paired capital  stock  of  at  least  $200,000.00  for  either  fire  or  marine 
insurance  or  $400,000.00  for  both  fire  and  marine  insurance.  Should  a 
company  desire  to  do  any  of  the  additional  classes  mentioned,  it  must 
have  an  additional  unimpaired  capital  of  $50,000.00  for  each  class.  No 
company  shall  do  any  of  said  kinds  of  insurance,  unless  authorized  so  to 
do  by  their  charter. 

Life  companies  may  transact,  iu  addition  to  such  kind  of  insurance, 
only  accident  and  health  and  Liability  insurance,  and  must  have  an  unim- 
paired capital  of  $200,000.00  and  an  additional  capital  of  $50,000.00  for 
transacting  accident  and  health  or  liability  insurance,  and  $100,000.00 
additional  capital  For  transacting  both  kinds. 

All  companies  other  than  these,  if  stock  companies,  must  have  a 
paid-up  capital,  unimpaired,  of  at  least. $100, 000. 00  for  transacting  one 
kind  of  business  and  $50,000.00  additional  for  transacting  any  other 
kind  of  insurance. 

A  capital  stock  company  is  insolvent  if  its  paid-in  capital  is  impaired 
more  than  twenty-five  per  centj  although  the  balance  exceeds  the  re- 
quired  amount  above  specified.  Only  that  portion  of  the  capital  stock 
can  be  considered  as  unimpaired  which  is  free  from  all  liabilities;  in- 
cluding  statutory  requirements  as  to  reserves,  etc. 

Where  policyholders  participate  in  the  management  of  the  company 
•  whether  it  has  a  capital  stock  or  not)  the  company  must  (in  lieu  of 
such  capital  stock)  hold  in  "available  cash  assets"  free  from  all  liabili- 
ties the  amount   above  specified  unless  some  special  provision  governs. 

Companies  organized  outside  of  the  United  States  must  have  on  de- 
posit with  some  State  official  charged  with  the  supervision  of  insurance 
in  that  State,  and  in  which  State  the  company  must  be  transacting 
business,  an  amount  equal  to  the  amount  of  capital  stock  or  cash  assets 
required.  Such  deposits  must  be  for  the  benefit  and  security  of  all 
the  policyholders  in  the  United  States. 


4  INSURANCE   LAWS   OF   CALIFORNIA. 

Such  companies  must  file  both  Home  Office  and  United  States  state- 
ments. 

Generally,  each  company  on  applying  must  file  the  following  docu- 
ments and  pay  the  fees  specified : 

1.  Certified  copy  of  Charter  (or  Articles  of  Incorporation),  and  Certificate 
as  to  Organization,  Capital  and  Assets  from  the  Insurance  Commissioner  of 

its  own  State $55  00 

2.  Appointment  of  General  Agent  and  Stipulation 5  00 

3.  Bond  in  the  sum  of  .$20,000.00 5  00 

4.  Statement  as  to  financial  condition 20  00 

5%  Application  for  Certificate  of  Authority  (fee  for  issuing  certificate) 10  00 

6.  Certificate  of  Deposit  of  Securities  (required  only  of  companies  organ- 
ized outside  of  the  United  States) 5  00 

Authorization  empowering  general  agent  to  sign  bond  and  appoint 
solicitors  and  agents  may  also  be  filed. 

The  Certificate  of  Authority  expires  on  July  1st  of  each  year  unless 
sooner  revoked. 

Financial  statement  mast  be  on  the  latest  convention  form,  and 
must  be  verified  by  an  examination  made  either  by  the  Department  of 
the  State  in  which  the  company  is  organized,  or  by  this  Department  at 
the  company's  expense. 

Every  agent  or  solicitor  must  have  a  license  which,  unless  sooner 
revoked,  expires  on  July  1st  of  each  year;  the  fee  for  same  is  $1.00. 

Taxes. 

All  companies  pay  a  tax  of  1}  per  cent  on  premiums,  less  return 
premiums,  and  reinsurance  in  authorized  companies. 

Retaliatory  statute. 

Applies  when  statutes  of  other  States  discriminate  in  favor  of  their 
domestic  companies  and  may  affect  taxes,  fees  and  other  matters. 

Requirements  of  office  of  secretary  of  state. 

Companies  must  file  with  the  Secretary  of  State  at  Sacramento  cer- 
tified copies  of  their  Articles  of  Incorporation,  the  fee  for  which  varies 
according  to  the  amount  of  capital  stock,  and  an  appointment  of  agent 
upon  whom  service  of  summons  and  other  legal  process  may  be  made; 
the  fee  for  filing  which  is  $5.00. 


INSURANCE  LAWS  OF  THE  STATE  OF  CALIFORNIA 


POLITICAL  CODE. 


TAUT  III.     TITLE  1.     CHAPTER  III.     ARTICLE  II. 

Sec   c(6S.     Insurance  commissioner,  how  appointed. 

.')('»!>.     Term  of  office. 

Insurance  commissioner,  how  appointed. 

Sec.  368.  The  following  executive  officers  shall  be  appointed  by  the 
governor,  with  the  consent  of  the  senate: 

1.  The  directors  of  the  insane  asylums;  the  trustees  for  the  asylum 
for  the  deaf,  dumb  and  blind;  the  insurance  commissioner;  the  members 
of  the  state  board  of  health;  the  fish  and  game  commissioners. 

2.  The  port  wardens,  when  port  wardens  and  their  appointment  are 
not  otherwise  provided  for  by  law;  the  pilot  commissioners ;  and  the 
pilots  for  each  harbor  where  there  is  not  a  board  of  pilot  commissioners, 
and  when  the  appointmenl  of  pilots  is  not  otherwise  provided  for  by  law. 

'.\.  All  other  executive  officers  whose  appointment  is  provided  by  law 
to  he  made  by  the  governor. 

Amended  Stats,  of  1913,  p.  412. 

Term  of  office. 

Skc.  369.  The  officers  enumerated  in  the  first  subdivision  of  the 
last  section  hold  their  offices  for  the  term  of  two  years,  those  in  the 
second  subdivision  for  the  term  of  four  years,  and  those  in  the  third 
subdivision  during  the  governor's  pleasure. 

Enacted  -March  12.  1872. 

PART   III.     TITLE   I.     CHAPTER   III.     ARTICLE  XVI. 
INSURANCE  COMMISSIONER. 

Sec.  588.  Eligibility. 

589.  Salary. 

591.  Rooms.     Expenses.     Special  fund. 

.-,«»•_>.  office. 

.">!>_.' J.  Pond. 

594.  Insurance  classified.    Capital  stock. 
594a.  I>c|>osiis  by  foreign  companies. 

595.  Genera]  duties  of  commissioner.     Withdrawal  of  companies. 

.">!><;.  Certificates  of  authority  to  companies.      Insurance   in   unauthorized  com- 
panies. 

596a.  Attorn  \\  general  t<>  examine  documents. 

597.  Examination  of  companies. 

598.  Obtaining  and  furnishing  information  to  policyholders  and  others. 

599.  Subpoena. 
800.  Records. 

601.  Actuary. 

602.  Insolvency. 

602a.   Liability  insurance  reserve. 

603.  Revocation  for  insolvency. 

603a.   Restoration  after  revocation  for  Insolvency. 
<>(>4.     Reporting  insolvency  to  attorney  general, 
604a.    insolvency   laws  applicable. 

605.       Fees. 

tine,.     Collections  and  assessments, 


6  INSURANCE   LAWS   OF    CALIFORNIA. 

Sec.  GOT.  Charter  and  similar  papers  to  be  filed. 

608.  Actions  not  to  be  transferred  to  United  States  court. 

609.  Approval  of  company  name. 

610.  Verifying  statements. 

611.  Filing,  adjusting  and  publishing  annual  statements. 

612.  Statements  by  companies,  other  than  life. 

613.  Statements  of  life,  health  and  accident  companies. 

614.  Mutual  companies. 

615.  Furnishing  statement  forms. 

616.  Designation  of  principal  agent  and  stipulation  for  service  of  papers. 

617.  Penalty  for  failure  to  file  statements.  * 

618.  General  provisions  for  deposits. 
.    .  619.  Certificate  of  deposit. 

620.  Withdrawal  of  deposit. 

621.  Annual  examination  of  securities. 

622.  Applying  foreign  discrimination  laws. 
622a.  Tax. 

623.  Bond  of  company. 

624.  Separate  bonds. 

625.  Furnishing  information  to  assessors. 
625a.  Listing  surety  companies  to  county  clerks. 

626.  Complying  with  Civil  Code. 

627.  Computations  and  payments  on  gold  basis. 

628.  Special  valuation  of  policies  of  life  insurance  companies. 

629.  General  valuation  of  policies  of  life  insurance  companies. 

630.  Secret  and  fraternal  societies. 

631.  Reviewing  commissioner's  acts. 
631a.  Publication  of  notice  of  withdrawal. 

632.  Informing  district  attorneys. 

633.  Licensing  agents  and  solicitors. 

634.  Registration  of  policies  of  life  insurance  companies. 
634a.  Definitions  and  exceptions. 

634o.  Demanding  and  recovering  payments  other  than  fees. 

Eligibility. 

Sec.  588.  No  person  is  eligible  to  the  office  of  insurance  commissioner 
or  deputy  who  is  an  officer,  agent,  or  employee  of  an  insurance  company. 

Enacted  as  section  594,  March  12,  1872.  Repealed  and  present  section 
enacted,  Stats.  1907,  p.  141. 

The  first  legislation  in  the  State  of  California  providing  for  a  supervisory  control 
of  the  business  of  insurance  was  the  Act  of  March  26.  1868  (Stats.  1868,  p.  336). 
By  that  act  the  office  of  insurance  commissioner  was  created.  *  '  *  *  The  act 
was  re-enacted  in  1872,  in  sections  594  et  seq.  of  the  Political  Code.  (State  Invest- 
ment and  Insurance  Co.  vs.  Superior  Court  of  San  Francisio.  101  Gal.  143-4.) 

The  Political  Code,  from  sections  594  to  634,  inclusive,  deals  specifically  with 
insurance  corporations,  both  domestic  and  foreign.  *  *  *  and  particularly  pro- 
vides in  great  detail  how  foreign  insurance  corporations  must  put  themselves  in 
position  to  be  served  with  process  in  this  State.  ( Harrigan  vs.  Home  Life  Insurance 
Company,  128  Cal.  537.) 

By  an  act,  approved  March  8,  1907,  which  went  into  effect  immediatelv  (Statutes 
1907.  p.  141)  article  16.  chapter  3,  part  III,  title  I,  of  the  Political  Code,  and  each 
and  every  section  thereof,  were  repealed  and  a  new  article  16,  covering  the  same 
subject  of  insurance,  was  enacted.  {Commercial  Union  Assurance  Company  vs. 
Wolf,  8  Cal.  App.  413,  416.) 

Salary. 

Sec.  589.  The  annual  salary  of  the  insurance  commissioner  is  four 
thousand  dollars  and  the  annual  salary  of  the  deputy  of  the  insurance 
commissioner  is  two  thousand  seven  hundred  dollars. 

Enacted  as  sections  628  and  629,  March  12,  1872.  Amended  Stats. 
1880,  p.  411;  1887,  p.  12.  Repoaled  and  present  section  enacted,  Stats. 
1907,  p.  141. 

Rooms,  expenses,  special  fund. 

Sec.  591.  The  commissioner  may  procure  suitable  rooms  for  his 
offices  and  may  provide  a  suitable  safe  and  furniture  therefor.  He  may 
also  provide  stationery,  fuel,  printing  and  other  conveniences  and  assist- 
ance and  incur  traveling  and  such  other  expenses  as  are  necessary  for 


INSURANCE    COMMISSIONER POWERS   AND   DUTIES.  7 

the  transaction  of  the  business  of  his  office.  Out  of  the  funds  paid  into 
the  state  treasury  by  the  insurance  commissioner,  there  shall  be  set 
aside  and  reserved  each  and  every  year  the  sum  of  thirty  thousand 
dollars  as  a  special  fund  to  be  called  the  insurance  commissioner's  special 
fund.  All  expenditures  authorized  in  this  section  must  be  audited  by 
the  board  of  examiners,  who  must  allow  the  same  and  direct  payment 
thereof  to  be  made,  and  the  controller  shall  draw  warrants  therefor  on 
the  state  treasury  for  the  payment  of  the  same  to  the  insurance  com- 
missioner out  of  the  said  insurance  commissioner's  special  fund. 

Enacted  as  section  630,  March  12,  1872.  Amended,  Stats.  1887,  p.  12 ; 
1906.  p.  31.  Repealed  and  present  section  enacted,  Stats.  1907,  p.  141. 
Amended  May  1,  1911.  Stats.  1911,  p.  1247. 

Office. 

Sec.  592.  The  commissioner  must  keep  his  office  in  the  city  of  San 
Francisco. 

Enacted  as  section  631,  March  12.  1872.  Repealed  and  present  section 
enacted,  Stats.  1907,  p.  141. 

Bond. 

Sec.  593.  The  commissioner  must  execute  an  official  bond  in  the  sum 
of  twenty  thousand  dollars. 

Enacted  as  section  632,  March  12,  1872.  Repealed  and  present  section 
enacted.  Stats.  1907,  p.  141. 

Insurance  classified.     Capital  stock. 

Sec.  594.  All  insurance  business  in  the  State  of  California  is  hereby 
classified  in  the  following  sixteen  kinds,  namely: 

1.  Life  insurance,  including  within  its  meaning  insurance  upon  the 
lives  of  persons  and  every  insurance  appertaining  thereto,  and  the 
granting,  purchasing  and  disposing  of  annuities. 

2.  Fire  insurance,  including  within  its  meaning  insurance  against 
loss  or  damage  by  fire.  Lightning,  windstorm,  tornadoes  or  earthquakes. 

•">.  Marine  Insurance,  including  within  its  meaning  insurance  upon 
vessels,  freights,  goods,  wares,  merchandise,  specie,  bullion,  jewels, 
profits,  commissions,  bank  notes,  bills  of  exchange,  and  other  evidences 
of  debt,  bottomry  and  respondentia  interests,  and  every  insurance  con- 
nected with  marine  risks  and  risks  of  transportation  and  navigation, 
including  the  risks  of  lake,  river  and  inland  transportation  and 
navigation. 

4.  Title  insurance,  including  within  its  meaning  the  issuance  of 
guarantees  and  policies  of  insurance  affecting  titles  to  real  estate,  and 
guaranteeing  or  insuring  owners  of  real  or  personal  property,  or  others 
interested  therein,  or  haying  liens  or  encumbrances  thereon,  against  loss 
by  reason  of  defective  titles,  encumbrances,  or  adverse  claims  of  title, 
or  other-wise. 

5.  Fidelity  and  surety  insurance,  including  within  its  meaning  the 
guaranteeing  of  persons  holding  places  of  public  or  private  trust,  and 
guaranteeing  and  executing  all  bonds,  undertakings,  and  contracts  of 
suretyship,  and  guaranteeing  the  performance  of  contracts  other  than 
insurance  policies,  and  not  including  guaranteeing  the  payment  of 
mortgages  or  t  rust   deeds. 


»  INSURANCE    LAWS    OP    CALIFORNIA. 

6.  Accident  insurance,  and  either  sickness  or  health  insurance,  includ- 
ing: within  its  meaning  insurance  against  injury,  disablement  or  death 
resulting  from  traveling  or  general  accidents,  and  against  disablements 
resulting  from  sickness  and  every  insurance  appertaining  thereto. 

7.  Plate  glass  insurance,  including  within  its  meaning  all  insurance 
against  breakage  of  glass,  whether  local  or  in  transit. 

8.  Liability  insurance,  including  within  its  meaning  workmen's  com- 
pensation insurance  and  all  other  insurance  against  loss  or  damage  re- 
sulting from  accident  to  or  injury,  fatal  or  non-fatal,  suffered  by  an 
employee  or  other  person,  and  for  which  the  insured  is  liable. 

9.  Boiler  and  machinery  insurance,  including  within  its  meaning  in- 
surance upon  steam  boilers  and  pipes,  fly  wheels,  engines  and  machinery 
connected  therewith  or  operated  thereby,  against  explosion  and  acci- 
dent, and  against  loss  and  damage  to  life  or  property  resulting  there- 
from, and  against  loss  of  use  and  occupancy  caused  thereby. 

10.  Burglary  insurance,  including  within  its  meaning  insurance 
against  loss  by  burglary  or  theft  or  both. 

11.  Credit  insurance,  including  within  its  meaning  insurance  of  mer- 
chants, traders,  and  those  engaged  in  business  and  giving  credit  for  loss 
and  damage  by  reason  of  giving  and  extending  credit  to  their  customers 
and  those  dealing  with  them,  and  insurance  or  guarantee  cither  by 
agreement  to  purchase  uncollectible  debts  or  otherwise,  against  loss  or 
damage  from  the  failure  of  persons  indebted  or  to  become  indebted  to 
the  insured,  or  to  meet  existing  or  contemplated  liabilities. 

12.  Sprinkler  insurance,  including  within  its  meaning  insurance 
against  loss  or  damage  by  water  to  any  goods  or  premises  arising  from 
the  breakage  or  leakage  of  sprinklers,  pumps  or  other  apparatus  placed 
for  extinguishing  fires,  and  of  water  pipes,  and  against  accidental  injury 
to  such  sprinklers,  pumns,  or  other  apparatus. 

13.  Team  and  vehicle  insurance,  including  within  its  meaning  insur- 
ance against  loss  or  legal  liability  for  loss  because  of  damage  to  property 
caused  by  the  use  of  teams  or  vehicles  whether  by  accident  or  collision 
or  by  explosion  of  any  engine  or  tank  or  boiler  or  pipe  or  tire  of  any 
vehicle,  and  also  including  insurance  against  theft  of  the  whole  or  any 
part  of  any  vehicle;  the  term  vehicle  as  here  used  does  not  include  ships 
or  vessels  nor  boats  nor  any  railroad  rolling  stock. 

14.  Automobile  insurance,  including  within  its  meaning  the  insur- 
ance of  the  owners  of  or  dealers  in  automobiles  against  any  and  all 
hazards  incident  to  ownership,  maintenance,  operation  and  use  of  such 
automobiles.  No  company  shall  assume  any  hazard  or  risk  upon  an 
automobile  unless  authorized  to  assume  hazards  or  risks  of  that  charac- 
ter by  its  charter  or  articles  of  incorporation.  Nothing  herein  contained 
shall  be  construed  to  prevent  a  fire  insurance  company  from  issuing  a 
policy  of  insurance  upon  an  automobile  covering  the  fire  hazard  only, 
nor  be  construed  to  prevent  a  marine  insurance  company  from  issuing 
a  policy  of  insurance  upon  an  automobile  covering  the  marine  hazard 
of  transportation  only,  nor  be  construed  to  prevent  a  life  insurance 
company  which  also  transacts  liability  insurance  from  issuing  a  policy 
of  insurance  upon  an  automobile,  covering  the  liability  hazard  only. 

15.  Mortgage  insurance,  including  within  its  meaning  the  guaran- 
teeing of  the  payment  of  the  principal,  interest  and  other  sums  agreed 
to  be  paid  under  the  terms  of  any  note  or  bond  secured  by  mortgage 


INSURANCE    COMMISSIONER — POWERS    AM)   DUTIES.  U 

or  triLst  deed,  or  other  sums  secured  under  the  terms  of  any  such  mort- 
gage or  trust  deed,  in  its  entirety,  or  of  an  undivided  or  other  partial 
interest  in  any  such  mortgage  or  trust  deed,  or  in  a  group  of  such  mort- 
gages or  trust  deeds,  and  the  guaranteeing  or  insuring,  directly  or 
indirectly,  against  loss  thereon. 

16.  Miscellaneous  insurance,  including  within  its  meaning  lightning, 
windstorm,  tornado  and  earthquake  insurance,  and  any  and  all  casualty 
insurance  not  included  in  any  of  the  foregoing  kinds,  and  which  is  a 
proper  subject  of  insurance. 

\<>  company  shall  do  any  of  the  foregoing  sixteen  kinds  of  insurance 
unless  authorized  to  do  so  by  its  charter.  No  company  having  a  capital 
stock  shall  do  life  insurance  in  California  without  having  a  capital  stock 
of  at  least  two  hundred  thousand  dollars,  nor  shall  any  such  company 
do  in  California  any  other  of  said  kinds  of  insurance,  except  the  sixth 
and  eighth  classes;  provided,  that  any  such  insurance  company  desiring 
to  do  either  the  sixth  or  eighth  class,  must  have  in  addition  to  such  two 
hundred  thousand  dollars  of  capital  stock,  at  least  fifty  thousand  dollars 
el'  capital  stock  for  each  class  it  desires  to  do.  and  one  hundred  thou- 
sand dollars  additional  capital  stock  to  do  both  such  additional  classes. 
Xo  company  having  a  capital  stock  shall  do  in  California  any  fire  insur- 
ance without  having  a.  capital  stock  of  at  least  two  hundred  thousand 
dollars  nor  shall  any  such  company  do  in  California,  any  other  of  said 
kinds  of  insurance,  except  the  third,  ninth,  twelfth,  fourteenth  and 
sixteenth  classes.  To  do  both  tire  and  marine  insurance  such  company 
must  have  a  capital  stock  of  a1  least  four  hundred  thousand  dollars,  and 
to  do  any  other  class  of  insurance,  such  company  must  have  an  addi- 
tional capital  stock  of  at  least  fifty  thousand  dollars  for  each  such 
additional  class  that  it  desires  to  do.  in  addition  to  the  two  hundred 
thousand  dollars  required  if  it  does  fire  insurance  or  the  four  hundred 
thousand  dollars  required  if  it  does  both  fire  and  marine  insurance. 
Xo  company  having  a  capital  stock  shall  do  in  California  any  of  said 
third  kind  of  insurance  without  having  a  capital  stock  of  at  least  two 
hundred  thousand  dollars,  nor  shall  any  Mich  company  do  in  California 
any  other  of  said  kinds  of  insurance  except  the  second,  thirteenth,  four- 
teenth and  sixteenth  classes.  To  do  both  fire  and  marine  insurance  such 
company  must  have  a  capital  stock  of  at  least  four  hundred  thousand 
dollars,  and  to  do  any  i  ther  class  of  insurance,  such  company  must  have 
an  additional  capital  stock  of  at  least  fifty  thousand  dollars  for  each 
such  additional  class  it  desires  to  do.  in  addition  to  the  two  hundred 
thousand  dollars  required  if  it  docs  marine  insurance  or  the  four  hundred 
thousand  dollars  required  if  it  dees  both  marine  and  fire  insurance. 
Xo  company  having  a  capital  stock  shall  do  in  California  any  of  the 
fifth,  sixth,  seventh,  eighth,  ninth,  tenth,  eleventh,  twelfth,  thirteenth, 
fourteenth  or  Fixteenth  of  said  kinds  of  insurance  without  having  a 
capital  stock  of  at  least  one  hundred  thousand  dollars  for  the  first  class 
of  insurance  su<-h  company  desires  to  do,  nor  do  any  other  of  such 
classes  without  having  in  addition  to  such  one  hundred  thousand  dollars 
of  capital  stock  at  Nasi  fifty  thousand  dollars  additional  capital  stock 
for  each  additional  kind  of  insurance,  that  it  desires  to  do.  Except  as 
above  prescribed,  no  company  doing  either  the  fifth,  sixth,  seventh, 
eighth,  ninth,  tenth,  eleventh,  twelfth,  thirteenth,  fourteenth  or  sixteenth 
classes  of  insurance,  shall  do  anv  of  the  first,  second  or  third  classes  of 


10  INSURANCE  LAWS   OP   CALIFORNIA. 

insurance.  No  company  doing  the  fourth  class  of  insurance  shall  do 
any  other  class  of  insurance,  and  no  company  doing  the  fifteenth  class 
of  insurance  shall  do  any  other  class  of  insurance,  and  no  company 
doing  any  other  class  of  insurance  shall  do  either  the  fourth  class  or  the 
fifteenth  class  of  insurance. 

Such  capital  stock  required  must  be  fully  paid  up  before  doing  any 
such  business  in  the  State  of  California,  except  that  companies  incorpo- 
rated under  the  laws  of  California,  must  have  at  least  twenty-five  per 
cent  of  their  capital  stock  paid  in  previous  to  the  issuance  of  any  policies 
and  the  residue  within  twelve  months  of  the  filing  of  the  articles  of 
incorporation  with  the  secretary  of  state.  If  such  residue  is  not  paid 
within  twelve  months,  the  insurance  commissioner  must  cancel  any  cer- 
tificate of  authority  previously  issued  to  such  company.  The  capital 
stock  required  must  be  unimpaired  and  shall  be  exclusive  of  all  liabilities 
for  losses  reported,  expenses,  taxes  and  reinsurance  of  all  outstanding 
risks  as  provided  in  sections  six  hundred  and  two  and  six  hundred  and 
two  a  of  the  Political  Code.  Every  company  organized  or  formed  under 
the  laws  of  any  other  state  or  country  as  a  mutual  or  as  a  joint  stock 
and  mutual  company  having  a  capital  stock  less  than  as  above  pre- 
scribed  must  have  in  lieu  of  such  capital  stock  available  cash  assets  of 
at  least  two  hundred  thousand  dollars  above  all  liabilities  for  los«as 
reported,  expenses,  taxes  and  reinsurance  of  all  outstanding  risks  as 
provided  in  sections  six  hundred  and  two  and  six  hundred  and  two  a  of 
the  Political  Code.  No  company  shall  do  in  California  any  title  insur- 
ance without  having  at  least  one  hundred  thousand  dollars  of  capital 
stock  fully  paid  in  in  cash,  previous  to  the  issuance  of  any  policy ;  and 
no  company  shall  do  in  California  any  mortgage  insurance  without 
having  at  least  one  hundred  thousand  dollars  of  capital  stock  fully  paid 
in  in  cash,  previous  to  the  issuance  of  any  policy. 

Enacted  March  8,  1907 ;  Stats.  1907,  p.  141.  Amended,  Stats.  1909, 
p.  928.     Amended,  Stats.  1911,  p.  1347.     Amended,  Stats.  1913,  p.  483. 

See  former  sections  419  and  420,  Civil  Code,  repealed  by  act  amending 
above  section  594  of  the  Political  Code.  That  portion  of  this  section 
classifying  insurance  business  was  added  to  the  law  in  1907.  The  sect  ion 
was  amended  in  1909  to  provide  for  " Team  and  Vehicle"  insurance,  and 
such  amending  act  of  1909  contained  the  following  provision:  "Sec.  2. 
The  provisions  of  this  act  shall  not  apply  to  life  or  fire  insurance  associa- 
tions operating  on  the  assessment  plan  or  on  the  fraternal  plan." 

See  sections  630  and  634a,  Political  Code;  post,  also  adopted  by  the 
act  so  adding  section  594  in  1907. 

A  corporation  was  attempted  to  be  formed  by  articles  dated  May  27,  1874,  the 
purpose  of  which  was  "to  insure  dwellings,  barns,  etc."  The  amount  of  the  capital 
stock  named  was  one  hundred  thousand  dollars,  only  five  thousand  dollars  of  which 
was  actually  subscribed.  After  doing  business  for  several  years,  the  attorney  general, 
on  the  relation  of  one  Schindler,  brought  an  action  in  the  name  of  the  people  against 
the  parties  individually,  who  were  alleged  to  constitute  the  alleged  unlawful  corpora- 
tion, to  have  them  each  and  all  restrained  from  the  usurpation  of  the  rights,  privileges, 
immunities,  and  franchises  of  a  corporation ;  but  the  alleged  corporation  was  treated 
as  a  nullity  and  was  not  joined  as  a  party  defendant.  The  trial  in  the  lower  court 
resulted  in  an  injunction  forbidding  the  alleged  corporation  from  doing  any  further 
business,  or  from  prosecuting  or  maintaining  any  action  in  its  name  or  for  its  benefit. 
On  appeal  the  supreme  court  declared  that  though  illegally  formed,  and  in  fact  never 
properly  constituted,  it  still  had  a  right  to  be  heard  as  an  entity,  and  was  a  necessary 
party  defendant  in  the  action:  and  further,  that  it  had  a  right  under  section  400  of 
the  Civil  Code  to  wind  up  its  business  through  trustees,  collect  what  was  due  to  it, 
pay  its  debts,  and  divide  anv  surplus  among  its  stockholders.  (People  ex  rel  Schind- 
ler vs.  FUnt  ct  al,  64  Cal.  49.) 


INSURANCE    COMMISSIONER POWERS   AND   DUTIES.  11 

An  association  organized  to  do  fidelity  and  surety  business  must  have  a  capital 
stock  of  at  least  $100,000.00.  A  company  organized  without  capital  stock,  but  having 
in  lieu  thereof  five  bonds,  either  personal  or  surety,  each  in  the  sum  of  $20,000.00, 
is  not  organized  in  accordance  with  law  and  can  not  legally  do.  nor  obtain  a  cer- 
tificate of  authority  to  do.  any  insurance  business  in  the  State  of  California :  Opinion 
of  the  Attorney  General.  February  12.   1910. 

The  so-called  bond  issued  by  the  Children's  Home  Society  of  California  is  in  all 
respects  an  annuity  policy  in  its  form,  except  that  the  consideration  paid  by  the 
annuitant  is  called  throughout  a  gift  or  gift  subject  to  certain  terms  and  conditions. 
It  is  obvious  that  the  name  which  the  payment  is  called  is  not  conclusive  as  to  the 
character  of  the  payment.  In  this  case  the  real  character  of  the  transaction  is  so 
obvious  that  the  name  hardly  causes  hesitation.  The  policy  moreover  after  reciting 
the  gift  proceeds  "and  for  other  good  and  valuable  consideration."  From  the  circular 
enclosed,  we  find  the  following:  "The  rates  which  we  are  nrepared  to  pay  are  deter- 
mined by  the  age.  at  the  time  the  bond  is  issued,  of  the  person  to  whom  the  annuity 
is  to  be  paid."  A  table  of  rates  is  given  from  which  it  appears  that  by  a  payment 
of  >  1,000.00,  the  annuitant  receives  any  amount  from  $55.00  per  year,  if  between  the 
age  of  45  and  50,  to  $100.00  in  case  he  is  over  85.  It  is  therefore  clear  that  the 
amount  that  is  paid  the  annuitant  is  determined  upon  the  age  of  the  annuitant,  and 
the  amount  that  is  paid  by  the  annuitant  to  the  society.  This  annual  payment  there- 
fore is  the  payment  of  an  annuity  and  if  it  is  done  as  a  business  and  for  a  considera- 
tion it  is  insurance  business.  It  may  be  claimed  that  the  amount  paid  by  the  annuitant 
to  the  society  is  a  gift  and  not  a  consideration  for  the  annual  payments,  but  the 
annual  payments  being  determined  in  direct  proportion  of  the  amount  of  "gift"  and 
the  age  of  the  annuitant,  this  claim  would  seem  to  be  unfounded  on  fact.  For  this 
reason,  I  conclude  that  tile  payments  made  are  the  direct  consideration  for  the 
annual  payments  made  by  the  society,  and  that  the  issuance  or  sale  of  these  annuity 
bonds  constitutes  the  business  of  insurance:  Opinion  of  attorney  for  insurance  com- 
missioner, December  8,  1913. 

See  oninion  attorney  for  insurance  commissioner,  September  5,  1913.  holding,  that 
the  issuance  of  certain  certificates  by  the  Insurance  Investment  Company  of  Los 
Angeles  guaranteeing  the  payment  of  certain  mortgages  and  deeds  of  trust  consti- 
tutes the  business  of  insurance,  to  wit:  mortgage  insurance,  when  the  same  are 
issued  as  a  business  and  for  a  profit. 

Deposits  by  foreign  companies. 

Sec.  594a.  No  insurance  company  organized  or  existing  under  the 
laws  of  any  country  outside  of  the  United  States  shall  transact  any 
business  of  insurance  in  the  State  of  California  without  first  making 
deposit,  and  thereafter  continuously  maintaining  such  deposit  except 
as  hereinafter  otherwise  specially  provided,  so  long  as  any  such  business 
transacted  in  this  state  remains  in  existence  for  any  purpose  whatever. 
either  unmatured  or  matured  but  unsettled,  and  whether  in  controversy 
or  not.  Such  deposit  must  be  of  securities  which  the  law  of  California 
permits  for  the  investment  of  the  assets  of  such  California  insurance 
companies.  Such  deposits  may  he  with  the  insurance  commissioner  or 
superintendent  of  insurance,  or  with  the  auditor,  comptroller  or  general 
fiscal  officer  <•!'  any  state  in  the  United  States  in  which  said  foreign 
company  is  authorized  to  do  such  insurance  business,  or  a  like  amount, 
held  in  trust  for  the  purposes  herein  specified  as  provided  for  by  the 
laws  of  that  state. 

The  amount  of  the  deposit  must  he  equal  to  the  minimum  amount  of 
the  capital  stock  or  available  cash  assets  required  by  the  preceding 
section  and  must  be  maintained  exclusive  of  all  liabilities  for  losses 
reported,  expenses,  taxes  and  reinsurance  of  all  outstanding  risks,  as 
provided  in  sections  602  and  602a  of  the  Political  Code.  Such  deposits, 
for  all  purposes  of  ti  e  insurance  laws  of  this  state,  may  be  treated  a.s  a 
pari  of  the  capita]  of  the  company  making  it. 

[f  such  deposil  is  not  so  maintained  in  the  State  of  California,  its 
existence  in  sonic  other  state  of  the  Toiled  States  shall  he  certified  at 
least  annually  to  the  insurance  commissioner  of  the  State  of  California 
by  the  superintendent  of  insurance  or  commissioner  of  insurance  or 
audit*  r.  or  comptroller,  or  general  fiscal  officer  of  the  state  in  the  United 


12  INSURANCE   LAWS   OF    CALIFORNIA. 

States  wherein  such  deposit  is  so  maintained,  and  also  so  certified  oftener 
and  whenever  from  time  to  time  required  by  the  insurance  commissioner 
of  the  State  of  California,  and  such  certificate  shall  show  in  detail  of 
what  such  deposit  consists. 

None  of  such  securities  so  deposited  shall  be  estimated  above  the  par 
value  of  the  same  nor  above  the  market  value.  Such  deposits  must  be 
for  the  benefit  and  security  of  all  the  policyholders  of  the  company  in 
the  United  States.  Such  securities  so  deposited  with  the  insurance  com- 
missioner of  the  State  of  California  shall  be  by  him  specially  deposited 
in  the  state  treasury  in  packages  marked  with  the  name  of  the  company 
from  whom  received,  and  so  long  as  the  company  continues  solvent  it 
shall  be  permitted  to  collect  the  interest  or  dividends  on  the  securities 
so  deposited,  and  from  time  to  time  to  withdraw  such  securities  on 
depositing  other  securities  in  the  stead  of  those  to  be  withdrawn,  such 
new  securities  to  be  of  the  character  and  value  specified  in  this  section, 
but  none  of  such  securities  shall  be  withdrawn  from  the  state  treasury 
except  upon  the  written  order  of  the  company  making  the  deposit,  wrhich 
order  must  be  indorsed  by  the  insurance  commissioner  of  the  State  of 
California  or  else  such  withdrawal  must  be  had  under  the  authority  of 
some  court  of  competent  jurisdiction,  which  must  be  obtained  if  the 
insurance  commissioner  for  any  reason  refuses  to  so  endorse  said  order. 

Whenever  such  deposit  has  been  made  with  the  insurance  commis- 
sioner of  the  State  of  California  as  provided  in  this  section,  said  com- 
missioner must  issue  to  the  company  so  depositing,  a  certificate  under 
his  official  seal  stating  the  items  and  amount  of  securities  so  deposited, 
and  their  value,  to  the  best  of  his  knowledge,  information  and  belief, 
find  in  case  of  withdrawal  and  substitution,  he  shall  issue  suitable  supple- 
mental similar  certificate.  None  of  the  provisions  of  this  section  shall 
affect  the  present  statutes  of  California,  either  as  to  registered  policies, 
oi'  under  what  is  known  as  the  retaliatory  law.  or  otherwise,  either  as 
to  papers,  bonds  or  other  securities. 

Enacted  March  S.  1907,  Stats.  1907.  p.  143.  Amended,  Stats.  1909, 
p.  910, 

A  deposit  in  another  state  made  by  a  company  organized  outside  the  United  States 
mi  st  Ik'  for  the  benefit  of  policyholders  only.  A  deposit  made  for  the  benefit  of 
"policyholders  and  creditors"  will  not  satisfy  the  requirements  of  this  section: 
Opinion  of  the  Attorney  General,  August  UK  1910. 

The  required  amount  of  deposits  need  not  be  in  a  single  state,  but  may  be  in  two  or 
more  states  of  the  United  States,  and  if,  in  the  aggregate,  the  securities  are  of  the 
required  amount,  character  and  value,  they  are  sntlicient  :  Opinion  of  the  Attorney 
General,  March  SI,  190$. 

General  duties  of  commissioner.     Withdrawal  of  companies. 

Sec.  595.  The  insurance  commissioner  must  receive  all  bonds  and 
securities  of  persons  engaged  in  the  transaction  of  insurance  business 
in  this  state,  and  file  and  safely  keep  the  same  in  his  office,  or  deposit 
them  as  provided  by  law.  He  must  examine  and  inspect  the  financial 
condition  of  every  company  engaged,  or  which  desires  to  engage  in  the 
business  of  insurance,  and  issue  a  certificate  of  authority  to  transact 
insurance  business  in  this  state  to  any  company  in  a  solvent  condition 
which  has  fully  complied  With  the  laws  of  this  state,  lie  must  determine 
the  sufficiency  and  validity  of  all  bonds  and  other  securities  required  1<> 
lie  given  by  persons  engaged,  or  to  be  engaged,  in  insurance  business, 
and  cause  the  same  to  be  renewed  in  case  of  the  insufficiency  or  invalidity 
thereof;  and  perform  all  other  duties  imposed  upon  him  by  the  laws 


INSURANCE    COMMISSIONER POWERS    AND   DUTIES.  13 

regulating  the  business  of  insurance  in  this  state,  and  enforce  the  execu- 
tion of  such  laws.  He  must  make,  on  or  before  1  he  first  day  of  August 
in  each  year,  a  report  to  the  governor  of  the  state,  containing  a  tabular 

statement  and  synopsis  of  the  reports  which  have  been  tiled  in  his  office, 
showing,  generally,  the  condition  of  the  insurance  business  and  interests 
in  this  state,  and  other  matters  concerning  insurance,  and  a  detailed 
verified  statement,  of  the  moneys  and  fees  of  offiee  received  by  him, 
and  for  what  purpose;  and  the  printing  of  said  report  and  ali  other 
printing  required  by  the  insurance  department  shall  be  exempt  from 
the  provisions  of  article  twelve,  chapter  three,  title  one,  part  three  of 
the  Political  Code. 

Any  insurance  company  may  pay  the  fees  and  costs  therefor  and 
may  surrender  to  the  insurance  commissioner  its  certificate  of  authority 
previously  granted,  and  apply  to  withdraw  from  this  state,  such  appli- 
cation to  be  in  the  form  of  a  written  instrument,  duly  executed,  and 
accompanied  with  evidence  of  due  authority  for  such  execution,  and  such 
written  instrument  to  be  properly  acknowledged.  The  commissioner,  at 
the  expense  of  the  company,  paid  by  it  in  advance,  must  make  due 
publication  of  such  application  for  withdrawal,  daily,  for  the  period  of 
one  week,  in  each  of  two  daily  newspapers  of  general  circulation,  the 
one  published  in  the  city  of  San  Francisco,  and  the  other  in  the  city  of 
Sacramento. 

The  commissioner  must  make  such  examination  of  the  books  of  such 
e<  mpany  as  may  be  necessary  to  ascertain  that  such  company  has  no 
liabilities  outstanding  and  not  paid  to  residents  of  this  state  and  no 
uncanceled  policies  in  favor  of  residents  of  this  state  and  if  he  finds  that 
such  company  has  no  outstanding  liabilities  to  residents  of  this  state 
and  no  uncanceled  policies  in  favor  of  the  residents  of  this  state,  he 
shall  cancel  such  certificate  of  authority.  All  such  examinations  must 
be  at  the  expense  of  the  company,  and  such  expense  must  be  paid  in 
advance. 

Enacted  March  12,  1872.  Amended,  Stats.  1873-4,  p.  8 ;  1877-8,  p.  18  ; 
L907,  p.  13.     Repealed  and  present  section  enacted,  Stats.  1907,  p.  145. 

Provisions  somewhat  similar  to  that  portion  of  former  section  595, 
authorizing  and  requiring  the  insurance  commissioner  to  revoke  the 
certificate  of  authority  of  any  foreign  insurance  company  doing  business 
in  this  state,  which  transfers  to  the  federal  court,  from  any  court  of  this 
state,  any  action  brought  by  a  citizen  of  the  state  arising  out  of  business 
transacted  in  this  state,  have  been  reenacted  in  present  section  608,  post . 

Genera]  duties  of  commissioner  and  his  authority  to  revoke  certificates  construed. 
i  Illinium)  vs.  Home  Life  Insurance  Company,  128  Cal.  539.) 

In  a  proceeding  brought  by  a  foreign  insurance  company  to  compel  the  insurance 
commissioner  to  issue  a  license  authorizing  the  company  to  transact  business  in  this 
state  for  i lie  year  ending  July  1.  1908,  where  it  had  caused  removal  of  suits  to  the 
federal  courts,  the  appellate  court  held:  It  appearing  that  at  the  time  the  act  of 
March  8,  1907,  went  into  effect,  the  company  was  doing  business  in  the  state  and  that 
its  license  had  not  been  revoked,  and  there  being  no  saving  clause  in  the  repealing 
act  providing  for  the  enforcement  of  the  penalty  for  past  delinquency,  a  removal  of 
suits  to  the  federal  court  prior  to  March  8,  1908,  was  no  authority  for  withholding 
license.     {Commercial  Unton  Assurance  Company  vs.   Wolf,-  8  Gal.  App.  413.) 

The  power  of  the  insurance  commissioner  to  revoke  the  certificate  of  authority 
under  which  a  foreign  company  is  doing  business  in  the  state  arises  only  (1)  when 
such  company  removes  an  action  to  a  federal  court,  and  (2)  when  it  becomes  insol- 
vent, lie  can  cancel  its  bond  only  when  defective  in  form  or  substance,  or  when  the 
sureties  are  financially  insufficient  :  and  he  has  no  power  or  discretion  to  do  either 
merely  on  the  ground  that  such  company  is  a  member  of  an  illegal  combination  to 
raise  insurance  rates,  or  because  it  refuses  to  pay  a  tax  which  it  claims  is  illegal. 
(  Liverpool,  London  t(-  Globe  I u.snr<tn<  c  Company  et  al.  vs.  Clunie,  88  Fed.  Rep.  1<>0.) 


14  INSURANCE   LAWS  OP   CALIFORNIA. 

The  commissioner  is  required  to  make  distribution  of  printed  copies  of  his  report 
under  section  337,  Political  Code,  which  section  is  as  follows: 

Sec.  337.  Of  the  report  of  the  insurance  commissioner,  the  commissioner  must 
have  printed,  at  the  expense  of  his  office,  one  thousand  copies,  and  must  deliver  of 
the  same  as  follows: 

To  the  governor,  twenty  copies. 

To  the  state  librarian,  ten  copies. 

To  the  secretary  of  state,  thirty  copies. 

To  the  sergeant-at-arms  of  the  senate,  eighty  copies. 

To  the  sergeant-at-arms  of  the  assembly,  one  hundred  and  sixty  copies. 

And  the  residue  must  be  distributed  by  the  commissioner  in*  furtherance  of  the 
interest  of  insurance. 

Certificates  of  authority  to  companies.     Insurance  in  unauthorized  companies. 

Sec.  596.  No  company  shall  transact  any  insurance  business  in  this 
state  without  first  complying  with  all  the  provisions  of  the  laws  of 
this  state,  and  thereafter  procuring  from  the  insurance  commissioner  a 
certificate  of  authority,  and  continuing  to  comply  with  the  laws  of  this 
state,  provided  that  insurance  may  be  procured  from  or  placed  with 
companies  not  authorized  to  transact  business  in  this  state  upon  the  terms 
and  conditions  hereinafter  stated.  Every  such  certificate  of  authority 
shall  expire  on  the  first  day  of  the  July  after  its  issuance  unless  sooner 
revoked.  No  certificate  of  authority  shall  be  granted  or  renewed  to  any 
company  in  arrears  to  the  state  or  to  any  county,  city  and  county,  city 
or  town  in  the  state  for  fees,  licenses,  taxes,  assessments,  fines  or  penalties 
accrued  on  business  previously  transacted  in  the  state,  nor  while  said 
company  is  otherwise  in  default  for  failure  to  comply  with  any  of  the 
laws  of  this  state  regarding  the  governmental  control  of  such  company 
by  the  state.  No  person  shall  act  as  agent  in  any  transaction  of  any 
insurance  business  for  any  insurance  company  not  authorized  to  transact 
such  business  in  this  state.  A  surplus  line  broker  is  one  licensed  by  the 
insurance  commissioner  to  act  as  broker  in  soliciting,  negotiating,  and 
effecting  insurance  under  conditions  hereinafter  stated,  to  be  procured 
from  or  placed  with  companies  not  authorized  to  transact  such  business 
in  this  state.  Within  the  meaning  of  this  law  ''authorized  companies" 
are  those  authorized  by  the  insurance  commissioner  to  transact  in  the 
State  of  California  the  kinds  of  insurance  business  that  they  are  trans- 
acting.    All  others  are  "unauthorized  companies." 

The  insurance  commissioner  may  issue  a  license  authorizing  any  indi- 
vidual to  act  as  surplus  line  broker  from  its  date  until  the  first  of  July 
following,  on  the  following  conditions : 

(a)  Payment  to  the  insurance  commissioner  of  a  fee  of  twenty-five 
($25.00)  dollars  in  advance. 

(b)  Delivery  to  the  insurance  commissioner  of  a  bond  to  the  State  of 
California  in  the  sum  of  five  thousand  ($5,000)  dollars  with  sureties 
having  the  qualifications  mentioned  in  sections  1056  and  1057  of  the 
Code  of  Civil  Procedure,  conditioned  that  said  licensee  will  fully  and 
faithfully  comply  with  the  requirements  of  section  596  of  the  Political 
Code. 

A  surplus  line  broker,  after  having  procured  from  and  placed  with 
authorized  companies  the  total  amount  of  insurance  obtainable  on  any 
property  from  a  majority  of  all  authorized  companies,  may  place  the 
excess  of  insurance  desired  over  such  amount  with  unauthorized  com- 
panies. No  insurance  is  to  be  procured  from  or  placed  with  unauthor- 
ized companies  by  any  one  except  by  a  surplus  line  broker  and  under 
such  conditions. 


INSURANCE   COMMISSIONER— POWERS   AND  DUTIES.  15 

The  following'  are  the  duties  of  a  surplus  line  broker  with  which  he  is 
required  to  eomply: 

1.  To  maintain  in  good  faith  an  office  in  this  state. 

2.  To  keep  in  said  office  books  of  account  correctly  showing  in  sepa- 
rate accounts  all  business  transacted  with  unauthorized  companies. 
Said  books  are  to  specify  the  dates  of  such  insurance  going  into  effect, 
the  name  of  the  insurers  and  of  the  insured,  the  gross  premiums  payable 
therefor,  the  terms,  character  of  insurance  and  locations  of  the  insured 
property.  They  shall  also  contain  statements  in  the  same  detail  of  all 
such  insurance  canceled,  or  on  which  premiums  have  been  increased  or 
reduced  and  the  amounts  of  additional  or  of  return  premiums  thereon. 
Such  books  are  to  be  open  at  all  times  for  the  inspection  of.  and  exam- 
ination by,  the  insurance  commissioner,  or  any  one  appointed  by  him 
for  said  purpose. 

3.  Within  one  week  after  the  surplus  line  broker  shall  have  obtained 
knowledge  of  the  completion  of  the  procurement  of  insurance  on  any 
property  from  an  unauthorized  company,  he  shall  file  with  the  insurance 
commissioner  a  true  report  showing  the  name  of  the  insured  and  of  the 
insurers,  the  character  of  the  insurance,  location  of  the  property,  gross 
premium  payable  therefor,  and  the  date  of  -  uch  insurance  taking  effect 
and  the  term  thereof;  also  a  list  of  authorized  companies  comprising  a 
majority  thereof  from  whom  the  insurance  so  effected  was  not  obtain- 
able As  soon  as  practicable  after  any  su -h  insurance  has  been  canceled 
or  any  premium  thereon  has  been  increased  or  reduced,  such  surplus 
line  broker  shall  file  with  the  insurance  commissioner  a  report  thereof 
in  the  same  detail  as  above  required  in  the  case  of  the  report  above 
referred  to. 

4.  On  or  before  the  first  day  of  March  of  each  year  he  shall  file  with 
the  insurance  commissioner  a  sworn  st  a  lenient  of  all  business  transacted 
under  his  license  during  the  last  preceding  calendar  year  ending  Decem- 
ber 31st.  Such  statement  shall  contain  true  accounts  of  the  gross  amount 
of  insurance  procured  from  and  placed  wTith  unauthorized  companies 
during  said  calendar  year,  the  gross  premiums  charged  therefor  includ- 
ing additional  insurance  premiums,  and  the  gross  amount  of  all  insur- 
ance canceled  during  said  year,  and  the  gross  return  premiums  thereon. 
Such  statements  shall  also  include  additional  premiums  charged  during 
said  calendar  year  on  insurance  previously  effected  and  the  gross  return 
premiums  during  said  calendar  year  on  insurance  previously  effected. 

5.  All  such  reports  and  statements,  shall  be  made  on  blanks  to  be  fur- 
nished surplus  line  brokers  by  the  insurance  commissioner  on  applica- 
tion therefor. 

6.  On  or  before  the  1st  day  of  June  of  each  year  said  surplus  line 
broker  shall  pay  to  the  insurance  commissioner  for  use  of  the  State  of 
California  three  (3%)  per  cent  of  the  grass  premiums  charged,  less 
three  (3%)  per  cent  of  all  return  premiums  on  policies  canceled,  or 
upon  which  the  premiums  have  been  reduced  during  the  year  ending 
December  31st  last  preceding. 

The  insurance  commissioner  shall  revoked  the  license  of  any  surplus 
line  broker  who  wilfully  fails  or  refuses  to  perform  any  of  his  duties 
hereinabove  specified.  If  in  the  opinion  of  the  insurance  commissioner 
the  solvency  of  any  surety  on  a  bond  hereby  required  has  become  im- 


16  INSURANCE   LAWS   OP   CALIFORNIA. 

paired  or  doubtful,  he  shall  notify  the  surplus  line  broker  in  writing, 
and  unless  within  ten  (10)  days  after  reeeipt  of  such  notice  the  solvency 
of  such  surety  is  proved  to  the  satisfaction  of  the  insurance  commis- 
sioner, or  a  new  bond  is  substituted  therefor,  said  insurance  commissioner 
shall  revoke  the  license  of  the  surplus  line  broker.  The  removal  of  the 
office  of  the  surplus  line  broker  from  this  state,  or  the  removal  therefrom 
of  his  accounts  of  his  business  as  such,  or  the  closing  of  his  said  office  for 
a  period  of  more  than  twenty  (20)  consecutive  days,  shall  constitute  a 
termination  of  the  authority  of  said  surplus  line  broker,  and  shall  be 
tantamount  to  an  express  revocation  of  his  license,  whether  or  not  the 
insurance  commissioner  thereafter  revokes  the  same.  No  new  license 
shall  be  issued  to  any  surplus  line  broker  whose  license  has  been  revoked 
for  any  reason  other  than  the  insufficiency  of  his  sureties,  within  the 
period  of  one  year  after  such  revocation,  and  until  all  indebtedness 
of  said  surplus  line  broker  on  former  business  has  been  paid  to  said 
insurance  commissioner.  Every  insured  for  whom  insurance  has  been 
effected  with  unauthorized  companies  shall  produce  for  examination  by 
the  insurance  commissioner,  whenever  requested  by  him,  in  writing,  so 
to  do,  all  policies,  contracts,  and  other  documents  evidencing  such  insur- 
ance and  disclose  to  him  the  true  amount  of  the  gross  premiums  paid  or 
agreed  to  be  paid  therefor,  or  upon  refusal  so  to  do,  he  shall  forfeit  to 
the  State  of  California,  the  sum  of  two  hundred  ($200)  dollars  for  each 
refusal.  All  policies  and  other  contracts  of  insurance  issued  without 
full  compliance  by  all  parties  concerned  with  the  laws  of  this  state, 
shall  be  null  and  void. 

Enacted  March  12,  1872.  Amended,  Stats.  1873-4.  pp.  9-61;  1877-8, 
p.  13;  1880,  p.  89.  Repealed  and  reenacted.  Stats.  1907,  p.  146.  Amended, 
Stats.  1911,  p.  1269. 

A  justice's  court  has  .iurisdict:ou  of  an  action  to  recover  a  penalty  given  by 
statute;  and  a  penalty  of  two  hundred  dollars  claimed  for  issuing  a  certificate  of 
relief  without  authority  from  the  insurance  commissioner,  is  such  a  penalty.  {Thomas 
vs.  Justice  Court,  SO  Cal.  40.) 

A  contract  to  indemnify  in  case  of  loss  of  a  lighter  by  the  hirer  of  the  same  is 
not  an  insurance  contract  requiring  authority  from  the  insurance  commissioner. 
( Wilmington  Trans.  Co.  vs.  O'Neil,  98  Cal.  7.) 

In  a  proceeding  brought  by  a  foreign  insurance  company  to  compel  the  insurance 
commissioner  to  issue  a  certificate  of  authority  to  do  business  in  the  state,  the  court 
cites  this  section  and  holds  that  the  act  repealing  all  of  the  prior  sections  of  the 
Political  Code,  relating  to  the  subject  of  insurances  contains  a  saving  clause  as  to  all 
causes  of  action  that  had  accrued,  or  that  had  been  commenced,  for  assessments. 
penalties  and  fines  under  the  repealed  law,  but  no  saving  clause  for  any  other  delin- 
quency, and  the  insurance  commissioner  had  no  authority  to  withhold  license.  (Com 
mercial  Union  Assurance  Company  vs.  Wolf,  8  Cal.  App.  417.) 

See  opinion  of  attorney  for  insurance  commissioner,  dated  January.  1014.  holding, 
that  the  business  intended  to  be  licensed  by  this  section  is  the  business  of  surplus 
line  broker  as  distinguished  from  insurance  business  proper;  that  only  business  trans 
acted  in  this  state  is  covered  by  the  section:  that  the  place  of  execution  and  delta  y 
of  policy  is  not  determinative  of  the  question  as  to  where  the  business  of  the  surplus 
line  broker  is  transacted;  all  business  transacted  by  a  surplus  line  broker  where 
either  the  property  insured  or  the  owner  of  the  same,  or  both,  are  situated  in  this 
state  is  business  done  in  this  state  within  the  meaning  of  the  section;  but  where 
both  the  owner  and  the  property  are  outside  of  the  state  the  business  transacted  by 
the  surplus  line  broker  is  not  business  transacted  in  this  state  and  is  not  subject  to 
the  provisions  of  this  section. 

That  the  insurance  commissioner  may  revoke  licenses  of  surplus  line  brokers  foi 
failing  to  make  a  return ;  that  one  not  a  licensed  broker  who  transacts  such  business 
in  this  state  may  be  prosecuted  under  section  439  of  the  Penal  Code  if  the  business 
is  done  for  a  resident  of  this  state,  and  under  section  435  of  the  Penal  Code  otherwise. 

That  the  insurance  commissioner  may  revoke  licenses  of,  or  sue  to  recover  tax 
from,  surplus  line  brokers  failing  to  pay  the  tax  as  provided  by  this  section. 


INSURANCE    COMMISSIONER POWERS   AND   DUTIES.  17 

Attorney  general  to  examine  documents. 

Sec.  596a.  Before  the  insurance  commissioner  issues  any  certificate 
of  authority  or  any  other  certificate  or  gives  any  permission  or  authority 
of  any  kind,  based  upon  any  written  instrument  or  document  or  certified 
copy  thereof,  required  by  the  statutes  of  the  State  of  California,  the 
commissioner  shall  submit  such  instrument,  document  or  certified  copy 
to  the  attorney  general  of  the  State  of  California,  who  shall  examine 
the  same  and  return  it  to  the  commissioner  with  his  certificate  or  opinion 
as  to  whether  such  instrument,  document  or  certified  copy  is  in  accord- 
ance with  the  requirements  of  law,  and  such  certificate  or  opinion  of 
the  attorney  general  shall  govern  and  control  the  commissioner,  subject 
only  to  review  by  a  court  of  competent  jurisdiction,  provided  that  neither 
the  authority  to  nor  bond  of  an  agent  or  solicitor,  nor  the  annual  state- 
ments as  to  the  condition  and  affairs  need,  but  may,  be  so  submitted 
(  with  the  same  effect)  by  the  commissioner  to  the  attorney  general. 

Enacted,  Stats.  1907,  p.  147. 

See  Commercial  Union  Assurance  Company  vs.   Wolf,  8  Cal.  App.  413. 
Examination  of  companies. 

Sec.  597.  The  commissioner,  whenever  he  deems  necessary,  or  when- 
ever he  is  requested  by  verified  petition,  signed  by  twenty-five  persons 
interested,  either  as  stockholders,  polieyhoMors.  or  creditors  of  any 
company  engaged  in  insurance  business  in  this  state,  showing  that  such 
company  is  insolvent  under  the  laws  of  this  state,  must  make  an  exami- 
nation of  the  business  and  affairs  relating  to  the  insurance  business  of 
such  company,  and  must  make  such  an  examination  whenever  any  com- 
pany is  organized  to  do  insurance  business  in  this  state,  and  before 
issuing  a  certificate  of  authority  other  than  renewals  to  such  company ; 
provided,  the  insurance  commissioner  shall  have  no  authority  to  issue 
and  no  certificate  of  authority  shall  be  issued  to  any  insurance  company 
or  corporation  hereafter  organized  or  incorporated  in  this  state,  whether 
the  same  be  organized  and  promoted  directly  or  by  means  of  a  holding 
company  or  corporation,  one  of  the  purposes  of  which  is  the  organization 
and  promotion  of  such  insurance  company  or  corporation,  where  such 
examination  shows  the  expense  of  organization  and  promotion  to  be  in 
excess  of  fifteen  per  cent  of  the  total  amount  actually  paid  on  its  capital 
stock  exclusive  of  surplus. 

Whenever  any  company  not  organized  under  the  laws  of  this  state, 
applies  for  a  certificate  of  authority  to  do  business  in  this  state,  the 
insma nee  commissioner  may  make  or  cause  to  be  made  by  the  insurance 
department  of  the  state  where  such  company  is  organized,  an  examina- 
tion of  the  business  and  affairs  relating  to  the  insurance  business  of 
such  company.  The  company  organized  or  existing  under  the  laws  of 
any  country  outside  of  the  United  States,  shall  be  deemed  to  be  organized 
wil liin  the  meaning  of  this  act  in  any  state  wherein  such  company  main- 
tains the  deposits  recpiired  by  the  laws  of  this  state.  For  the  purpose 
of  making  such  examination  the  insurance  commissioner  shall  have  free 
access  to  all  the  books  and  papers  of  such  company,  and  must  thoroughly 
inspect  and  examine  all  its  affairs,  and  ascertain  its  condition  and  ability 
to  fulfill  its  engagements,  and  that  it  has  complied  with  all  the  provisions 
of  law  applicable  to  its  insurance  transactions. 


18  INSURANCE    LAWS   OF    CALIFORNIA. 

Every  company  examined  under  the  provisions  of  this  section  must 
open  its  books  and  papers  for  the  inspection  of  the  commissioner,  and 
otherwise  facilitate  such  examination ;  and  the  commissioner  may  admin- 
ister oaths  and  examine  under  oath  any  person  relative  to  the  business 
of  such  company ;  and  if  he  finds  the  books  to  be  carelessly  or  improperly 
kept  or  posted  he  must  employ  sworn  experts  to  re-write,  post,  and 
balance  the  same  at  the  expense  of  such  company.  Such  examination 
must  be  conducted  in  the  county  where  such  company  has  its  principal 
office,  and  must  be  private,  unless  the  commissioner  deems  it  necessary 
to  publish  the  result  of  such  investigation  in  which  case  he  may  publish 
the  same  in  two  of  the  public  newspapers  of  this  state,  one  of  which 
must  be  published  in  the  city  of  San  Francisco.  All  examinations  must 
be  at  the  expense  of  the  company,  such  expense  to  be  paid  in  advance, 
and  if  any  such  company  refuses  to  pay  such  expenses  in  advance  the 
insurance  commissioner  may  refuse  to  issue  any  such  certificate  of 
authority  and  must  revoke  any  existing  certificate  of  authority  authoriz- 
ing such  company  to  do  business. 

Enacted  March  12,  1872.  New  section  enacted,  Stats.  1907,  p.  147. 
Amended,  Stats.  1911,  p.  334. 

Obtaining  and  furnishing  information  to  policyholders  and  others. 

Sec.  598.  Any  person  interested  in.  as  owner,  assignee,  pledgee  or 
payee,  of  any  policy  of. insurance  and  desiring  any  information  about 
such  policy,  may  file  with  the  insurance  commissioner  an  affidavit  show- 
ing that  he  is  entitled  to  the  benefits  of  the  provisions  of  this  section  and 
apply  to  the  insurance  commissioner  for  his  certificate  of  the  facts  or 
information  desired.  If  the  records  of  his  office  show  the  facts  or  infor- 
mation desired,  the  insurance  commissioner  shall  prepare  his  certificate 
reciting  such  facts  or  information.  If  his  records  do  not  show  the  facts 
or  information  desired  the  insurance  commissioner  may  deliver  an  order 
to  the  agent  of  the  company,  designated  under  section  616  of  the 
Political  Code,  directing  such  company  to  state  such  information  or 
facts  in  an  affidavit  and  deliver  such  affidavit  to  him. 

In  such  affidavit  the  company  must  make  a  full,  true  and  correct 
statement  of  all  the  said  facts  and  information  in  the  possession  of 
said  company,  whether  such  information  be  contained  in  the  books, 
records,  or  papers  in  this  state  or  in  any  other  state  or  country.  If 
such  company  neglects  or  refuses  to  make  and  deliver  such  affidavit 
to  the  insurance  commissioner  within  ninety  days  from  the  date  of  the 
delivery  of  the  said  order  by  the  commissioner  to  the  said  agent  as  herein 
provided,  the  commissioner  must  revoke  the  certificate  of  authority 
authorizing  the  company  to  do  business  in  this  state.  Immediately  after 
receiving  any  affidavit  from  any  insurance  company  pursuant  to  the 
provisions  of  this  section  the  commissioner  must  certify  such  affidavit 
to  the  person  so  applying  for  the  information  or  facts.  Such  affidavit 
so  certified  by  the  insurance  commissioner  shall  be  delivered  to  the 
applicant  by  delivering  it  to  him  personally  or  by  depositing  the  same 
in  the  United  States  post  office  and  prepaying  the  postage  thereon. 

If  a  loss  has  been  sustained  under  any  policy  of  insurance  and  such 
policy  has  been  lost  or  destroyed  all  rights  of  every  kind  and  nature 
and  the  time  for  the  presentation  of  notice  of  loss  and  the  time  for  the 
presentation  of  proof  of  loss  are  stayed  from  the  date  such  interested 
person  delivers  to  the  commissioner  the  affidavit  herein  provided  for 


INSURANCE    COMMISSIONER POWERS   AND   DUTIES.  19 

and  until  five  days  after  the  date  of  the  delivery  by  the  insurance  com- 
missioner to  such  interested  person  of  any  affidavit  furnished  by  any 
insurance  company  pursuant  to  the  provisions  of  this  section 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  148. 

Practically  new  section  substituted  for  old  one. 

Subpoena. 

Sec.  599.  The  commissioner  may  issue  subpoenas  for  witnesses  to 
attend  and  testify  before  him  on  any  subject  touching  insurance  busi- 
ness, or  in  aid  of  his  duties,  which  may  be  served,  obeyed,  and  enforced 
as  provided  in  the  Code  of  Civil  Procedure  for  civil  cases,  and  the 
commissioner  may  issue  attachments  and  impose  the  same  penalty  which 
a  court  might  impose  for  disobedience ;  and,  in  addition,  the  defaulting 
witness  may  be  punished  as  provided  in  the  Penal  Code. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  149. 

Records. 

Sec.  600.  The  commissioner  must  keep  and  preserve  in  a  permanent 
form  a  full  record  of  his  proceedings,  including  a  concise  statement  of 
the  condition  of  each  company  visited  or  examined  by  him. 

Enacted  as  section  603,  .March  12,  1872.  Repealed  and  present  sec- 
tion enacted.  Stats.  11)07.  p.  149. 

Actuary. 

Sec.  601.  The  commissioner  may  employ  an  actuary  to  make  the 
valuation  of  life  policies,  at  a  compensation  of  not  exceeding  one  cent 
for  each  thousand  dollars  of  insurance,  to  be  paid  by  the  company  for 
which  the  valuation  is  made. 

Enacted  as  section  604,  March  12,  1872.  Repealed  and  present  section 
enacted,  Stats.  1907,  p.  149. 

Insolvency. 

Sec.  602.  Whenever  provisions  for  the  liabilities  of  any  company 
engaged  in  the  business  of  fire,  marine,  or  inland  navigation  insurance  in 
this  state,  for  losses  reported,  expenses,  taxes  and  reinsurance  of  all  out- 
standing risks,  estimated  at  fifty  per  cent  of  the  premiums  received  and 
receivable  on  all  fire  risks  and  marine  time  risks,  at  the  full  premiums 
received  and  receivable  on  all  other  marine  risks,  would  so  far  impair 
its  capital  paid  in  as  to  reduce  the  same  below  two  hundred  thousand 
dollars,  or  below  seventy-five  per  cent  of  said  capital  paid  in,  such  com-' 
pany  is  insolvent;  and  in  case  of  a  company  engaged  in  such  insurance 
in  tliis  state,  on  the  mutual  plan,  if  the  available  cash  assets  of  such  com- 
pany shall  not  exceed  its  liabilities,  as  hereinbefore  enumerated,  in  the 
full  sum  of  two  hundred  thousand  dollars,  such  company  is  insolvent; 
and  wherever  provision  for  the  liabilities  of  any  company  engaged  in  the 
business  of  insuring  any  one  against  loss  or  damage  resulting  from 
accident  to  or  injury  suffered  by  an  employee  or  other  person  for  which 
the  person  insured  may  be  liable,  for  losses  reported,  expenses,  taxes 
and  reinsurance  of  all  outstanding  risks  estimated  as  provided  in  section 
602a  of  the  Political  Code  would  so  far  impair  its  capital  paid  in  as  to 
reduce  the  same  below  one  hundred  thousand  dollars,  or  below  seventy- 
live  per  cent  of  said  capital  paid  in,  such  company  is  insolvent;  and 


20  INSURANCE   LAWS   OP    CALIFORNIA. 

whenever  provision  for  the  liabilities  of  any  company  engaged  in  any 
kind  of  insurance  business  in  this  state,  other  than  life,  liability,  and 
insurance  of  titles  to  real  estate,  provided  for  in  section  594  of  the 
Political  Code  of  this  state,  for  losses  reported,  expenses,  taxes,  and 
reinsurance  of  all  outstanding  risks,  estimated  at  such  rates  as  are 
accepted  by  the  insurance  authorities  of  the  State  of  New  York,  wrould 
so  far  impair  its  capital  paid  in  as  to  reduce  the  same  below  one  hun- 
dred thousand  dollars,  or  below  seventy-five  per  cent  of  said  capital 
stock  paid  in,  such  company  is  insolvent;  and  in  case  of  a  company 
engaged  in  such  insurance  business  in  this  state,  on  the  mutual  plan, 
if  its  available  cash  assets  shall  not  exceed  its  liabilities,  as  hereinbefore 
enumerated,  in  the  full  sum  of  one  hundred  thousand  dollars,  such 
company  is  insolvent.  In  the  case  of  a  company  engaged  in  the  business 
of  life  insurance,  whenever  its  liabilities  for  losses  reported,  expenses, 
taxes,  and  reinsurance  of  all  its  outstanding  risks  written  prior  to 
January  first,  eighteen  hundred  and  ninety-two,  at  the  rates  based  upon 
the  American  Experience  Table  of  Mortality  with  interest  at  the  rate 
of  four  and  one  half  per  cent  per  annum,  and  reinsurance  of  all  its  out- 
standing risks  written  from  and  after  the  thirty-first  day  of  December, 
eighteen  hundred  and  ninety-one,  up  to  and  including  the  thirty-first 
day  of  December,  nineteen  hundred  and  seven,  at  rates  based  upon  the 
Combined  Experience  or  Actuaries'  Table  of  Mortality  with  interest 
at  the  rate  of  four  per  cent  per  annum,  and  reinsurance  of  all  its  .out- 
standing risks  written  from  and  after  December  thirty-first,  nineteen 
hundred  and  seven,  at  rates  based  upon  the  American  Experience  Table 
of  Mortality  with  interest  at  the  rate  of  three  and  one  half  per  cent 
per  annum,  exceeds  its  assets,  such  company  is  insolvent.  In  the  case 
of  a  company  engaged  in  the  business  of  insurance  of  the  title  to  real 
estate,  whenever  provision  for  its  liability  for  losses  reported,  expenses, 
and  taxes,  would,  after  exhausting  its  surplus  fund,  required  by  section 
432  of  the  Civil  Code  or  otherwise,  so  far  impair  its  capital  stock  paid 
in  as  to  reduce1  the  same  below  one  hundred  thousand  dollars,  or  below 
seventy -five  per  cent  of  said  capital  paid  in,  such  company  is  insolvent. 

The  provisions  of  this  act  shall  not  apply  to  life  or  fire  insurance 
associations  operating  on  the  assessment  plan  or  on  the  fraternal  plan. 

Enacted   March  12,  1872.     Amended,  Stats.  1873-4,  pp.  9  and  62; 

1877-8,  p.   14;  1887,  p.  19;  1905,  p.  379.     Repealed  by  act  approved 

March  8,  1907.  and  present  section,  with  same  number,  covering  same 

subject-matter  with  material  important  changes,  enacted,  Stats.  1907, 

p.  149.     Amended  by  act  approved  April  15,  1909,  Stats.  1909,  p.  915, 

and  such  amending  act  in  1909  contained  the  sentence  appearing  at  the 

end  of  the  section  as  above  given. 

See  comment  in  connection  with  section  594,  Political  Code,  ante. 

See  State  Investment  &  Ins.  Co.  vs.  Superior  Court,  101  Cal.  135,  144,  145,  149. 

Liability  insurance  reserve. 

Sec.  602rt.  In  estimating  the  condition  of  any  company  engaged  in 
the  business  of  liability  insurance  under  the  provisions  of  this  article 
the  insurance  commissioner  shall  charge  as  liabilities  all  outstanding 
indebtedness  of  such  company,  and  the  premium  reserve  of  policies  in 
force,  equal  to  the  unearned  portions  of  the  gross  premiums  charged  for 
covering  risks,  computed  on  each  respective  risk  from  the  date  of  the 
issuance  of  the  policy.     The  indebtedness  for  outstanding  losses  under 


INSURANCE    COMMISSIONER POWERS   AND   DUTIES.  21 

insurance  against  loss  or  damage  resulting  from  accident  to  or  injuries 
suffered  by  an  employee  or  other  person  and  for  which  the  insured  is 
liable,  and  under  insurance  against  loss  from  liability  on  account  of  the 
death  of  or  injury  to  an  employee  not  caused  by  the  negligence  of  the 
employer,  shall  be  determined  as  follows :  Each  corporation  which  writes 
policies  covering  any  of  the  said  kinds  of  insurance  shall  include  in  the 
annual  statement  a  schedule  of  its  experience  thereunder,  in  the  United 
States  and  foreign  countries -in  the  case  of  corporations  organized  in  the 
United  States,  and  in  the  United  States  only  in  the  case  of  corporations 
organized  outside  of  the  United  States  giving  each  calendar  year's  expe- 
rience separately,  and  crediting  or  charging  each  item  to  the  year  in 
which  the  policy  to  which  it  relates  was  written,  as  follows:  (1)  the 
earned  premiums  on  all  such  policies  written  during  the  period  of  ten 
years  immediately  preceding  the  date  as  of  which  the  statement  is  made, 
being  the  gross  premiums  on  all  such  policies  including  excess  and  addi- 
tional premiums  and  premiums  in  course  of  collection,  less  return  pre- 
miums and  premiums  on  canceled  policies,  and  less  the  unearned  pre- 
miums on  policies  in  force  as  shown  in  such  annual  statement;  (2)  the 
amount  of  all  payments  of  whatsoever  nature  made  by  reason  or  on 
account  of  injuries  covered  by  such  policies  written  during  said  period. 
This  amount  shall  include  medical  and  surgical  attendance,  payments  to 
claimants,  legal  expenses,  salaries  and  expenses  of  investigators,  adjust- 
ers, and  field  men,  rents,  stationery,  telegraph  and  telephone  charges, 
postage,  salaries  and  expenses  of  office  employees,  home  office  expenses, 
and  all  other  payments  made  on  account  of  such  injuries,  whether  such 
payments  are  allocated  to  specific  claims  or  are  unallocated;  (3)  the 
number  of  suits  being  defended  at  the  date  as  of  which  the  statement  is 
made  under  policies  written  during  said  period,  except  suits  in  which 
liability  is  not  dependent  upon  negligence  of  the  insured,  and  a  charge 
of  seven  hundred  and  fifty  dollars  for  each  suit;  (4)  the  number  of 
deaths  for  which  the  insured  are  liable  without  proof  of  negligence,  cov- 
ered by  policies  written  during  said  period,  and  not  paid  for  at  the  date 
as  of  which  the  statement  is  made  and  a  charge  of  the  amount  necessary 
to  pay  for  such  deaths;  (5)  the  number  of  unpaid  claims  at  the  date  as 
of  which  the  statement  is  made  on  account  of  nonfatal  injuries  for  which 
the  insured  are  liable  without  proof  of  negligence,  covered  by  policies 
written  during  said  period,  and  a  charge  equal  to  the  present  value  of 
the  estimated  future  payments;  (6)  the  loss  ratio  determined  from  the 
foregoing  as  to  each  year  separately  using  as  the  divisor  the  earned 
premiums  shown  in  item  (1)  and  as  the  dividend  the  amount  of  pay- 
ments shown  in  item  (2)  plus  the  amounts  charged  in  items  (3),  (■■!■) 
and  (5)  ;  (7)  the  number  of  suits  being  defended  at  the  date  as  of  which 
the  statement  is  made  under  policies  written  more  than  ten  years  prior 
to  such  date,  except  suits  in  which  liability  is  not  dependent  upon  negli- 
gence of  the  insured;  (8)  the  number  of  deaths  for  which  the  insured 
are  liable  without  proof  of  negligence,  covered  by  policies  written  more 
than  ten  years  prior  to  the  date  as  of  which  the  statement  is  made,  and 
not  paid  for  at  such  date;  (9)  the  number  of  unpaid  claims  at  the  date 
;is  of  which  the  statement  is  made  on  account  of  nonfatal  injuries  for 
which  the  insured  are  liable  without  proof  of  negligence,  covered  by 
policies  written  more  than  ten  years  prior  to  such  date.  All  unallocated 
payments  in  item  (2)  made  in  a  given  calendar  year  subsequent  to  the 


22  INSURANCE   LAWS   OP   CALIFORNIA. 

first  four  years  in  which  a  corporation  has  been  issuing  such  policies  shall 
be  distributed  as  follows :  thirty-five  per  centum  shall  be  charged  to  the 
policies  written  in  that  year,  forty  per  centum  to  the  policies  written  in 
the  preceding  year,  ten  per  centum  to  the  policies  written  in  the  second 
year  preceding,  ten  per  centum  to  the  policies  written  in  the  third  year 
preceding,  and  five  per  centum  to  the  policies  written  in  the  fourth  year 
preceding,  and  such  payments  made  in  the  first  four  calendar  years  in 
which  a  corporation  has  been  issuing  such  policies  shall  be  distributed  as 
follows:  in  the  first  calendar  year  one  hundred  per  centum  shall  be 
charged  to  the  policies  written  in  that  year,  in  the  second  calendar  year 
fifty  per  centum  shall  be  charged  to  the  policies  written  in  that  year  and 
fifty  per  centum  to  the  policies  written  in  the  preceding  year,  in  the  third 
calendar  year  forty  per  centum  shall  be  charged  to  the  policies  written 
in  that  year,  forty  per  centum  to  the  policies  written  in  the  preceding 
year,  and  twenty  per  centum  to  the  policies  written  in  the  second  year 
preceding,  and  in  the  fourth  calendar  year  thirty-five  per  centum  shall 
be  charged  to  the  policies  written  in  that  year,  forty  per  centum  to  the 
policies  written  in  the  preceding  year,  fifteen  per  centum  to  the  policies 
written  in  the  second  year  preceding,  and  ten  per  centum  to  the  policies 
written  in  the  third  year  preceding,  and  a  schedule  showing  such  distri- 
bution shall  be  included  in  such  annual  statement:  Each  such  corpora- 
tion shall  be  charged  with  indebtedness  for  outstanding  losses  upon  such 
policies  determined  as  follows:  (10)  for  all  suits  being  defended  under 
policies  written  more  than  ten  years  prior  to  the  date  as  of  which  the 
statement  is  made,  except  suits  in  which  liability  is  not  dependant  upon 
negligence  of  the  insured,  one  thousand  dollars  for  each  suit ;  (11)  for  all 
suits  being  defended  under  policies  written  more  than  five  years  and  less 
than  ten  years  prior  to  the  date  as  of  which  the  statement  is  made,  except 
suits  in  which  liability  is  not  dependent  upon  negligence  of  the  insured, 
seven  hundred  and  fifty  dollars  for  each  suit;  (12)  for  all  deaths  for 
which  the  insured  are  liable  without  proof  of  negligence,  covered  by 
policies  written  more  than  five  years  prior  to  the  date  as  of  which  the 
statement  is  made,  the  amount  necessary  to  pay  for  such  deaths ;  (13)  for 
all  unpaid  claims  on  account  of  nonfatal  injuries  for  which  the  insured 
are  liable  without  proof  of  negligence  under  policies  written  more  than 
five  years  prior  to  the  date  as  of  which  the  statement  is  made,  the  present 
value  of  the  estimated  future  payments;  (14)  for  the  policies  written  in 
the  five  years  immediately  preceding  the  date  as  of  which  the  statement 
is  made  an  amount  determined  as  follows :  multiply  the  earned  premiums 
of  each  of  such  five  years  as  shown  in  item  (1)  by  the  loss  ratio  ascer- 
tained as  in  item  (6)  on  all  the  policies  written  in  the  first  five  years  of 
the  said  ton-year  period  using  as  the  divisor  the  sum  of  the  earned 
premiums  shown  in  item  (1)  for  such  first  five  years,  and  as  the  dividend 
the  sum  of  the  payments  shown  in  item  (2)  for  such  first  five  years  plus 
the  sum  of  the  charges  in  items  (3),  (4)  and  (5)  for  such  first  five  years, 
but  the  ratio  to  be  used  shall  in  no  event  be  less  than  fifty-two  per 
centum  at  and  after  December  thirty-first,  nineteen  hundred  and  thir- 
teen, nor  less  than  fifty-three  per  centum  at  and  after  December  thirty- 
first  nineteen  hundred  and  fourteen,  nor  less  than  fifty-four  per  centum 
at  and  after  December  thirty-first,  nineteen  hundred  and  fifteen,  nor  less 
than  fifty-five  per  centum  at  and  after  December  thirty-first,  nineteen 


INSURANCE    COMMISSIONER POWERS   AND   DUTIES.  23 

hundred  and  sixteen;  provided,  furthermore,  that  in  the  case  of  insur- 
ance covering  liability  for  workmen's  compensation  the  ratio  to  be  used 
shall  in  no  event  be  less  than  seventy  per  centum  at  and  after  December 
thirty-first,  nineteen  hundred  and  thirteen,  nor  less  than  seventy-two 
per  centum  at  and  after  December  thirty-first,  nineteen  hundred  and 
fourteen,  nor  less  than  seventy-four  per  centum  at  and  after  December 
thirty- first,  nineteen  hundred  and  fifteen,  nor  less  than  seventy-five  per 
centum  at  and  after  December  thirty-first,  nineteen  hundred  and  sixteen, 
and  from  the  amount  so  ascertained  in  each  of  the  last  five  years  of  said 
ten-year  period  deduct  all  payments  made  under  policies  written  in  the 
corresponding  year  as  shown  in  item  (2),  and  the  remainder  in  the  case 
of  each  year  shall  be  deemed  the  indebtedness  for  that  year;  provided, 
however,  that  if  the  remainder  in  the  case  of  any  year  of  the  first  three 
years  of  the  five  years  immediately  preceding  the  date  as  of  which  the 
statement  is  made  shall  be  less  than  the  sum  of  the  three  following  items 
for  that  year  at  that  date — (a)  the  number  of  suits,  except  suits  in  which 
liability  is  not  dependent  upon  negligence  of  the  insured,  being  defended 
under  policies  written  in  that  year  and  a  charge  of  seven  hundred  and 
fifty  dollars  for  each  suit,  (&)  the  amount  necessary  to  pay  for  all  deaths 
for  which  the  insured  are  liable  without  proof  of  negligence,  covered  by 
policies  written  in  that  year,  and  (c)  the  present  value  of  estimated 
unpaid  claims  on  account  of  nonfatal  injuries  for  which  the  insured  are 
liable  without  proof  of  negligence,  covered  by  policies  written  in  that 
year — then  the  sum  of  said  items  (a),  (&)  and  (c)  shall  be  the  indebted- 
ness for  that  year.  A  corporation  which  has  been  issuing  such  policies 
for  a  period  of  less  than  ten  years  shall  nevertheless  include  in  its  annual 
statement,  a  schedule  as  hereinbefore  required  for  the  years  in  which  it 
shall  have  issued  such  policies,  and  shall  be  charged  with  an  indebtedness 
determined  in  the  same  manner,  but  in  determining  the  indebtedness  for 
policies  written  in  Hie  five  years  immediately  preceding  the  date  as  of 
which  the  statement  is  made,  the  minimum  ratio  hereinbefore  prescribed 
shall  be  used  subject  to  the  same  deductions  and  provisions  as  in  the  case 
of  corporations  that  have  been  issuing  such  policies  for  ten  years  or 
mi  I'c. 

Enacted  as  section  612a,  Stats.  1905,  p.  380.  Repealed  and  present 
section  enacted.  Stats.  11)07.  p.  151.     Amended  Stats.  1913,  p.  493. 

Note. — This  section  was  again  amended  by  an  act  approved  the  same  day.  (Stats. 
1913,  p.  465.)      See  "Editorial  Note."  Cyc.  Code,  1906-1913,  pp.  67  and  70. 

Revocation  for  insolvency. 

Sec.  603.  Whenever  the  commissioner  ascertains  that  any  company 
engaged  in  the  insurance  business  is  insolvent  within  the  meaning  of 
this  chapter,  he  must  revoke  the  certificate  of  authority  granted,  and 
send  by  mail  to  such  company,  addressed  to  it  at  its  principal  place  of 
business,  or  deliver  to  it,  a  notice  of  such  revocation  and  cause  a  copy  of 
such  notice  together  with  the  proof  of  service  to  be  filed  in  his  office. 

Enacted  as  first  part  of  section  600,  March  12,  1872.  Repealed  and 
present  section  enacted.  Stats.  1907,  p.  152.  Original  Code  section  603 
is  now  sect  ion  600. 

Sec  Statt  I n r> stiii<  hi  and  Insurance  Company  vs.  Superior  Court  of  San  Francisco, 
KM  Cal.  135,  which  citea  the  following,  viz: 

The  insolvency  of  an  insurance  company  which  will  authorize  the  insurance 
commissioner  to  'revoke  his  certificate  of  authority  and  require  the  corporation  to 
repair  its  capital  is  of  ;i  merely  arbitrary  character,  defined  by  the  statute.     It  is  not 


24  INSURANCE   LAWS   OP    CALIFORNIA. 

the  ordinary  commercial  insolvency;  and  for  the  purposes  of  the  statute  it  may  tie 
held  insolvent,  while  at  the  same  time  it  may  be  actually  solvent  in  a  business  sense, 
and  justly  so  regarded  by  th<?  commercial  world.  The  commissioner  may  stop,  in 
his  discretion,  with  the  delivery  of  the  requisition  directing  the  corporation  to  repair 
its  capital,  before  resorting  to  harsher  measures  such  as  revoking  his  certificate  and 
making  publication  of  the  insolvency  of  the  company.  (Palache  vs.  Pacific  Insurance 
Co.,  42  Cal.  432-434.) 

The  power  of  the  insurance  commissioner  to  revoke  the  certificate  of  authority 
under  which  a  foreign  company  is  doing  business  in  the  state  arises  only  (1)  when 
such  company  removes  an  action  to  a  federal  court,  and  (2)  when  it  becomes  insol- 
vent.    (Liverpool,  London  &  Globe  Insurance  Company  vs.  Clunie,  88  Fed.  Rep.  160.) 

See  section  597,  Pol.  Code,  ante. 

Restoration  after  revocation  for  insolvency. 

Sec.  603a.  If  any  insurance  company  (whose  certificate  of  authority 
has  been  revoked  by  the  insurance  commissioner  on  the  ground  that  such 
company  is  insolvent)  within  ninety  days  after  the  receipt  of  the  notice 
of  revocation,  shall  repair  its  capital  to  such  an  extent  that  such  com- 
pany is  solvent  within  the  provisions  of  section  six  hundred  and  two 
(602)  of  the  Political  Code,  then  upon  such  fact  being  made  to  appear 
to  the  insurance  commissioner,  he  may  issue  a  new  certificate  of  authority 
in  the  same  manner  and  to  the  same  effect  as  an  original  certificate  of 
authority. 

Enacted  as  section  600a  in  1907,  Stats.  1907,  p.  149,  and  number 
changed  to  603a  in  1909,  Stats.  1909,  p.  913.     The  act  of  1909  provided  ■ 

"Sec.  3.  Nothing  herein  contained  shall  affect  any  rights  acquired 
under  said  section  600a,  but  all  such  rights  shall  be  preserved  under  (he 
provisions  of  said  section  603a." 

See  old  section  600. 

See  note  to  preceding  section. 
Reporting  insolvency  to  attorney  general. 

Sec.  604.  When  the  insurance  commissioner  ascertains  that  any 
insurance  corporation  organized  under  the  laws  of  this  state  is  insolvent 
he  must  certify  such  fact  to  the  attorney  general.  Upon  receipt  of  such 
certificate  so  made  by  the  insurance  commissioner,  the  attorney  general 
must  commence  an  action  against  such  company  under  the  provisions  of 
chapter  V,  title  X,  part  II  of  the  Code  of  Civil  Procedure.  If  on  the 
trial  of  any  such  action  it  appears  to  the  court  that  such  company  is 
insolvent,  before  causing  judgment  to  be  entered,  the  court  may  direct 
the  corporation  and  the  officers  thereof  to  levy  an  assessment  on  the 
capital  stock  sufficient  to  enable  the  defendant  corporation  to  pay  its 
debts,  and  in  such  order  shall  give  full  directions  as  to  the  manner  of 
levying  such  assessment  and  the  amount  thereof,  and  such  assessment 
must  be  levied  before  judgment  is  entered.  In  all  other  respects  the 
relief  awarded  against  the  defendant  company  shall  be  the  same  as 
provided  in  said  chapter  five  of  the  Code  of  Civil  Procedure.  Any 
receiver  thereafter  appointed  to  liquidate  the  affairs  of  such  company, 
shall  have  full  power  to  bring  such  actions  as  may  be  necessary  for  the 
purpose  of  recovering  the  amounts  of  the  assessments  levied  as  herein 
provided.  In  any  action  commenced  pursuant  to  the  provisions  of  this 
section  the  court  shall  have  power  to  authorize  the  defendant  insurance 
company,  or  the  receiver  appointed  to  liquidate  the  affairs  of  such  com- 
pany, to  reinsure  all  or  any  part  of  the  business  theretofore  written  by 
such  companv. 

Enacted,  Stats.  1907,  p.  153.     Amended.  Stats.  1909,  p.  916. 

See  note  to  section  603,  ante. 


INSURANCE    COMMISSIONER POWERS    AND    DUTIES.  25 

Insolvency  laws  applicable. 

Sec.  604rt.  When  the  insurance  commissioner  shall  have  revoked  the 
certificate  of  authority  authorizing  any  insurance  company,  not  a  cor- 
poration, to  do  business  on  the  ground  that  such  company  is  insolvent, 
any  person  or  persons  may  commence  insolvency  proceedings  against 
such  company.  Such  proceedings  must  be  done,  had,  and  taken  ha  all 
respects  as  provided  by  the  then  existing  insolvency  laws  of  the  state. 

Enacted,  Stats.  1907,  p.  153. 

Fees. 

Sec.  605.  The  commissioner  must  require  in  advance,  in  United 
States  gold  coin,  the  following  fees:  (1)  For  filing  papers  required 
under  either  of  subdivisions  two  or  three  or  four  of  section  607  of  the 
Political  Code,  fifty-five  dollars;  (2)  for  filing  papers  required  under 
subdivision  five  of  section  607  of  the  Political  Code,  on  account  of 
change  or  changes  made  at  one  time,  ten  dollars;  (3)  for  filing  annual 
statement  required  to  be  filed,  twenty  dollars;  (4)  for  filing  bond  under 
section  623  of  the  Political  Code,  five  dollars;  (5)  for  filing  appointment 
of  agent  or  stipulation  or  both  appointment  and  stipulation  under  sec- 
tion 616  of  the  Political  Code,  fiye  dollars;  (6)  for  filing  each  certificate 
of  deposit  of  securities  under  section  594a  of  the  Political  Code,  five 
dollars;  (7)  for  furnishing  copies  of  papers  filed  in  his  office,  twenty 
cents  per  folio;  (8)  for  certifying  copies,  one  dollar  each;  (9)  for  each 
certificate  issued,  as  provided  in  section  619  of  the  Political  Code,  five 
dollars;  (10)  for  registering  each  policy  as  provided  by  section  634  of 
the  Political  Code,  one  dollar;  (1.1)  for  issuing  each  annual  certificate 
of  authority  authorizing  any  insurance  company  to  transact  business  in 
this  state,  ten  dollars;  (12)  for  issuing  each  annual  license  under  section 
633  of  the  Political  Code,  to  an  agent  or  solicitor,  one  dollar;  (13)  for 
issuing  each  annual  license  under  section  633a  of  the  Political  Code  to 
an  insurance  broker,  ten  dollars;  (14)  for  attaching  the  seal  of  office  to 
any  [taper  or  document  not  herein  specified,  one  dollar;  (15)  for  issuing 
any  other  certificate,  two  dollars. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  153.     Amended,  Stats.  1909,  p.  917. 

Collections  and  assessments. 

Sec.  606.  If  the  salary  of  the  commissioner  and  the  expenses  of  his 
office  exceed  the  fees  and  charges  collected  by  him,  such  excess  must  be 
annually  assessed  by  the  commissioner  upon  all  persons  or  corporations 
engaged  in  the  business  of  insurance  in  this  state,  and  they  are  severally 
Liable  therefor,  pro  rata,  according  to  the  amount  of  premiums  received 
or  receivable  from  risks  taken  in  this  state,  respectively,  during  the  year 
ending  on  the  thirty-first  day  of  December  next  preceding  the  assess- 
ment. The  commissioner  must  collect  all  fees  and  assessments,  and  pay 
monthly  into  the  state  treasury  whatever  amounts  may  be  received  and 
collected  by  him.  If  any  insurance  company  neglects  or  refuses  to  pay 
the  amount  of  any  sncli  assessments  within  ten  days  after  demand 
thereof  in  writing  by  the  insurance  commissioner,  the  commissioner 


26  INSURANCE   LAWS   OF   CALIFORNIA. 

may  revoke  the  certificate  of  authority  previously  granted  and  commence 
an  action  to  recover  such  assessment. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  154. 

An  officer  of  the  state  has  no  authority  to  loan  the  moneys  of  the  state,  nor  to 
deposit  the  same  as  a  general  deposit  in  a  bank,  although  such  deposit  be  made  by 
him  as  an  agent  of  the  state,  and  not  upon  his  individual  account.  (People  vs. 
Wilson,  117  Cal.  242.) 

Charter  and  similar  papers  to  be  filed. 

Sec.  607.  The  commissioner  must  cause  every  company,  before 
engaging  in  the  business, of  insurance,  to  file  in  his  office  as  follows: 

1.  A  certified  copy  of  the  last  annual  statement  or  a  verified  finan- 
cial statement  exhibiting  the  condition  and  affairs  of  such  company. 

2.  If  incorporated  under  the  laws  of  this  state,  a  copy  of  the  articles 
of  incorporation  and  certificate  of  any  increase  or  diminution  of  the 
capital  stock,  certified  by  the  secretary  of  state  to  be  a  copy  of  that  which 
is  filed  in  his  office. 

3.  If  incorporated  under  the  laws  of  any  other  state  or  country,  a 
copy  of  the  articles  of  incorporation,  if  organized  or  formed  under  any 
law  requiring  articles  to  be  filed,  duly  certified  by  the  officer  having  the 
custody  of  such  articles,  or  if  not  so  organized,  a  copy  of  the  law.  charter, 
or  deed  of  settlement  under  which  the  deed  of  organization  is  made,  duly 
certified  by  the  proper  custodian  thereof,  or  proved  by  affidavit  to  be  a 
copy ;  also,  a  certificate  under  the  hand  and  seal  of  the  proper  officer  of 
such  state  or  country  having  supervision  of  insurance  business  therein, 
if  any  there  be,  that  such  corporation  or  company  is  organized  under  the 
laws  of  such  state  or  country,  with  the  amount  of  capital  stock  or  assets 
required  by  this  article. 

4.  If  not  incorporated,  a  certificate  setting  forth  the  nature  and 
character  of  the  business,  the  location  of  the  principal  office,  the  names 
of  the  persons  and  of  those  composing  the  company,  firm,  or  association, 
the  amount  of  actual  capital  employed  or  to  be  employed  therein,  and 
the  names  of  all  officers  and  persons  by  whom  the  business  is  or  may  be 
managed. 

The  certificate  must  be  verified  by  the  affidavit  of  the  chief  officer. 
secretary,  agent,  or  manager  of  the  company;  and  if  there  are  any 
written  articles  of  agreement  or  company,  a  copy  thereof  must  accom- 
pany such  certificates. 

Enacted  March  12,  1872.  Amended,  Stats.  1887,  p.  8.  Repealed  and 
new  section  enacted,  Stats.  1907,  p.  155.     Amended,  Stats.  1911,  p.  1351. 

See  Commercial  Union  Assurance  Company  vs.  Wolf,  S  Cal.  App.  413-19. 
Actions  not  to  be  transferred  to  United  States  court. 

Sec.  608.  If  any  foreign  insurance  company  doing  business  in  this 
state  shall  transfer  or  cause  to  be  transferred  to  the  United  States 
circuit  court  from  any  court  of  this  state  having  jurisdiction  of  the 
subject-matter,  any  action  or  special  proceeding  arising  or  growing  out 
of  any  business  previously  transacted  in  this  state,  then  the  insurance 
commissioner  shall  have  the  power  and  it  shall  be  his  duty  upon  receiv- 
ing a  certified  copy  of  the  record  showing  the  facts  hereinabove  set  forth 


INSURANCE    COMMISSIONER — POWERS   AND   DUTIES.  27 

to  immediately  revoke  the  certificate  of  authority  authorizing  such  com- 
pany to  transact  insurance  business  in  this  state. 

Enacted  March  18,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  155. 

See  old  section  595. 

Under  this  section  it  is  the  duty  of  the  insurance  commissioner,  "upon  receiving  a 
certified  copy  of  the  record  showing  the  facts  hereinabove  set  forth,  to  immediately 
revoke  the  certificate  of  authority."  Such  revocation  only  deprives  the  insurance 
company  of  the  right  to  transact  insurance  business  in  the  state  until  July  1,  follow- 
ing. The  license  or  certificate  of  authority  under  the  act  in  every  case  expires  on  the 
first  day  of  July  after  its  issuance,  and  must  be  renewed  annually.  The  act  of  revok- 
ing can  oniy  deprive  the  company  of  that  which  the  commissioner  had  already  given 
by  issuing  the  certificate.  (Commercial  Union  Assurance  Company  vs.  Wolf,  8  Cal. 
App.  413-19.) 

"A  state  has  the  right  to  prohibit  a  foreign  corporation  from  doing  business  within 
its  borders  unless  such  prohibition  is  so  conditioned  as  to  violate  some  provision  of 
the  federal  constitution.  *  *  *  Having  the  power  to  prevent  a  foreign  insurance 
company  from  doing  business  at  all  within  the  state,  we  think  the  state  can  enact  a 
statute  such  as  is  above  set  forth.  *  *  *  The  state  may  compel  the  foreign  cor- 
poration to  abstain  from  the  federal  courts  or  to  cease  to  do  business  within  the 
state.  It  gives  the  company  the  option.  This  is  justifiable  because  the  complainant 
(company)  has  no  constitutional  right  to  do  business  in  that  state.  That  state  has 
authority  at  any  time  to  declare  that  it  shall  not  do  business  there.  This  is  the  whole 
point  of  the  case,  and  without  reference  to  the  injustice,  the  prejudice,  the  wrong  that 
is  alleged  to  exist,  must  determine  the  question.  No  right  of  the  complainant  (com- 
pany) under  the  laws  or  constitution  of  the  United  States,  by  its  exclusion  from  the 
state,  is  infringed,  and  that  is  what  the  state  now  accomplishes.  There  is  nothing, 
therefore,  that  will  justify  the  interference  of  this  court.  *  *  *  The  effect  of  the 
statute  is  simply  to  place  foreign  insurance  companies  upon  a  par  with  domestic 
ones  doing  business  in  Kentucky.  *  *  *  The  mere  enactment  of  a  statute  which 
in  substance  says,  if  you  choose  to  exercise  your  right  to  remove  a  case  into  a  federal 
court  your  right  to  further  do  business  within  the  state  shall  cease  and  your  permit 
shall  be  withdrawn,  is  not  open  to  any  constitutional  objection." — Security  Mut.  L. 
/,/*.  Co.  vs.  Prewitt.  202  U.  S.  246,  HI  L.  ed.  1013,  26  Sup.  Ct.  619  (Day  and  Harlan, 
JJ..  dissenting),  affirming  26  Ky.  L.  1239,  83  S.  W.  611,  1  L.  R.  A.  (N.  S.)  1019, 
dissenting  opinion  of  Burnham  and  Barker,  JJ.,  29  Ky.  L.  Rep.  77,  84  S.  W.  527. 

Approval  of  company  name. 

Sec.  609.  '  The  commissioner  must  require  the  name  under  which  any 
company  hereafter  proposes  to  be  formed  or  organized  under  the  laws 
of  this  state,  for  the  transaction  of  insurance  business,  to  be  submitted 
to  him  before  the  commencement  of  such  business;  and  he  may  reject 
any  name  or  title  so  submitted  when  the  same  is  an  interference  with  or 
too  similar  to  one  already  appropriated,  or  likely  to  mislead  the  public 
in  any  respect;  and  in  such  case  a  name  not  liable  to  such  objection  must 
be  chosen. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Slats.  1907,  p.  155. 

Verifying  statements. 

Sec.  610.  The  commissioner  must  require  statements  and  reports  to 
be  verified  as  follows:  (1)  If  it  be  made  by  a  corporation  organized 
under  the  laws  of  this  state,  by  the  oaths  of  any  two  of  the  executive 
officers  thereof;  (2)  If  it  be  made  by  an  individual  or  firm,  by  the  oath 
of  such  individual  or  member  of  the  firm;  (3)  If  made  by  a  foreign 
insurance  company,  or  person,  by  the  oath  of  the  principal  executive 
officer  thereof,  or  manager  residing  within  the  United  States. 

Enacted  March  12,  1872.     Amended,  Stats.  1873-74,  p.  10;  1887,  p.  9. 
Repealed  and  present  section  enacted.  Stats.  1907,  p.  155. 
Filing,  adjusting  and  publishing  annual  statement. 

Sec,  611.  All  insurance  companies  doing  business  in  this  state  must 
make  and  file  with  the  insurance  commissioner,  on  or  before  the  first- 
day  of  March  of  each  year,  statements,  which  must  exhibit  the  condition 


28  INSURANCE   LAWS   OF    CALIFORNIA. 

and  affairs  of  every  such  company,  on  the  thirty-first  day  of  December 
then  next  preceding,  a  synopsis  of  which  statements,  as  adjusted  by  the 
commissioner  upon  a  proper  examination  of  the  same,  must  be  published 
by  such  company  in  the  city  or  city  and  county  where  the  principal 
office  in  this  state  is  located,  said  publication  to  be  daily  for  the  period 
of  one  week  in  some  daily  newspaper  of  general  circulation  or  four 
consecutive  times  in  some  weekly  newspaper  of  general  circulation. 

Enacted  March  12,  1872.  Amended,  Stats.  1873-74,  p.  10;  1877-7S. 
p.  15 ;  1887,  p.  9.  Repealed  and  new  section  enacted,  Stats.  1907,  p.  155. 
Amended,  Stats.  1911,  p.  1274. 

See  Commercial  Union  Assurance  Company  vs.  Wolf,  S  Cal.  App.  413-19. 
Statement  by  companies,  other  than  life. 

Sec.  612.  Such  statement,  if  made  by  other  than  life  insurance  com- 
panies, must  show: 

First — The  amount  of  the  capital  stock  of  the  company. 

Second — The  property  or  assets  held  by  the  company  specifying: 

1.  The  value  of  real  estate  held  by  said  company; 

2.  The  amount  of  cash  on  hand  and  deposited  in  banks  to  the  credit 
of  the  compan}',  specifying  the  same ; 

3.  The  amount  of  cash  in  the  hands  of  agents,  and  in  course  of  trans- 
mission; 

4.  The  amount  of  loans  secured  by  bonds  and  mortgages,  constituting 
the  first  lien  on  real  estate,  on  which  there  is  less  than  one  year's  interest 
due  or  owing; 

5.  The  amount  of  loans  on  which  interest  lias  not  been  paid  within  one 
year  previous  to  such  statement; 

6.  The  amount  due  the  company  upon  which  judgments  have  been 
obtained; 

7.  The  amount  of  stocks  of  this  state,  of  the  United  States,  or  any 
incorporated  city  of  this  state,  and  of  any  other  stocks  owned  by  the 
company,  specifying  the  amount,  number  of  shares,  and  par  and  market 
value  of  each  kind  of  stocks ; 

S.  The  amount  of  stocks  held  as  collateral  security  for  loans,  with  the 
amount  loaned  on  each  kind  of  stock,  its  par  value  and  its  market  value ; 

9.  The  amount  of  interest  due  and  unpaid; 

10.  The  amount  of  all  other  loans  made  by  the  company,  specifying 
the  same ; 

11.  The  amount  premium  notes  on  hand  on  which  policies  are  issued; 

12.  All  other  property  belonging  to  the  company,  specifying  the  same. 
Third — The  liabilities  of  such  company,  specifying: 

1.  The  amount  of  losses  due  and  unpaid; 

2.  The  amount  of  claims  for  losses  resisted  by  the  company ; 

3.  The  amount  of  losses  in  process  of  adjustment  or  in  suspense, 
including  all  reported  or  supposed  losses; 

4.  The  amount  of  dividends  declared,  due,  and  remaining  unpaid ; 

5.  The  amount  of  dividends  declared,  but  not  due; 

6.  The  amount  of  money  borrowed  and  security  given  for  the  payment 
thereof; 

7.  Gross  premium  (without  any  deductions)  received  and  receivable 
upon  all  unexpired  fire  risks  running  one  year  or  less  from  date  of 
policy,  reinsurance  thereon  at  fifty  per  cent; 


INSURANCE    COMMISSIONER — POWERS   AND   DUTIES.  29 

8.  Gross  premiums  (without  any  deductions)  received  and  receivable 
upon  all  unexpired  fire  risks  running  more  than  one  year  from  the  date 
of  policy,  reinsurance  thereon  pro  rata ; 

9.  Gross  premiums  (without  any  deductions)  received  and  receivable 
upon  all  unexpired  marine  and  inland  navigation  risks,  except  time 
risks,  reinsurance  thereon  at  one  hundred  per  cent ; 

10.  Gross  premiums  (without  any  deductions)  received  and  receivable 
on  marine  time  risks,  reinsurance  thereon  at  fifty  per  cent; 

11.  Amount  reclaimable  by  the  insured  on  perpetual  fire  insurance 
policies,  being  ninety-five  per  cent  of  the  premiums  or  deposit  received; 

12.  Eeinsurance  fund  and  all  other  liabilities,  except  capital; 

13.  Unused  balances  of  bills  and  notes  taken  in  advance  for  premiums 
on  open  marine  and  inland  policies,  or  otherwise,  returnable  on  settle- 
ment ; 

14.  Principal  unpaid  on  scrip  or  certificates  of  profits,  which  have 
been  authorized  or  ordered  to  be  redeemed; 

L5.   Amount  of  all  other  liabilities  of  the  company,  specifying  the  same. 
Fourth — The   income   of   the   company   during   the   preceding  year, 
.specifying: 

1.  The  amount  of  cash  premiums  received  ; 

2.  The  amount  of  notes  received  from  premiums; 

3.  The  amount  of  interest  money  received,  specifying  the  same; 

4.  The  amount  of  income  received  from  all  other  sources,  specifying 
the  same. 

Fifth — The  expenditures  i  f  the  preceding  year,  specifying: 

1.  The  amount  of  losses  paid; 

2.  The  amount  of  dividends  paid  ; 

3.  The  amount  of  expenses  paid,  including  commissions  and  fees  to 
agents  and  officers  of  the  company; 

4.  The  amount  paid  for  taxes ; 

o.   The  amoinil   of  all  other  payments  and  expenditures. 
Sixth — 1.  Tlie  amount  of  risks  written  during  the  year; 

2.  The  amount  of  risks  expired  during  the  year; 

3.  The  amonnl  of  risks  written  during  the  year  in  the  State  of  Cali- 
fornia ; 

4.  The  amount  of  premiums  thereon ; 

Provided,  that  any  foreign  fire,  marine,  or  inland  insurance  company, 
incorporated  or  not  incorporated,  doing  business  within  this  state,  shall 
return  only  the  business  done  in  the  United  States  and  the  assets  of  the 
company  situated  in  the  United  States  and  held  for  the  protection  of 
the  policyholders  of  the  company  who  are  residents  of  the  United  States, 
except  that  any  further  returns  requested  from  time  to  time  by  the 
insurance  commissioner  must  be  made. 

Enacted  March  12.  1872.  Amended,  Stats.  1877-78,  p.  15;  1887,  p.  9. 
Repealed  and  present  section  enacted,  Stats.  11)07,  p.  155. 

See  Commercial  Union  Assurance  Com pany  vs.    Wolf,  8  Cal.  App.  413-19. 
Statements  of  life,  health  and  accident  companies. 

Sec.  613.  Such  statement,  if  made  by  life,  health,  and  accident  com- 
panies, must  show  : 

Capital. 

First — The  amount  of  the  capital  stock  of  the  company. 


30  1XST  TRANCE   LAWS   OF   CALIFORNIA. 

Assets. 

Second — The  property  or  assets  held  by  the  company,  specifying: 
(1)  The  value  of  the  real  estate  held  by  the  company;  (2)  The  amount 
of  cash  on  hand  and  deposited  in  banks  to  the  credit  of  the  company, 
specifying  the  same;  (3)  The  amount  of  loans  secured  by  bond  and 
mortgage  on  real  estate,  specifying  the  same;  (4)  Amount  of  loans 
secured  by  pledge  of  bonds,  stocks,  or  other  marketable  securities  as 
collateral,  specifying  the  same;  (5)  Cash  market  value  of  all  stocks  and 
bonds  owned  by  the  company,  specifying  the  same;  (6)  Interest  due  the 
company  and  unpaid;  (7)  Interest  accrued,  but  not  due;  (8)  Premium 
notes  and  loans  in  any  form  taken  in  payment  of  premiums  on  policies 
now  in  force;  (9)  Gross  amount  of  premiums  in  process  of  collection 
and  transmission  on  policies  in  force;  (10)  Gross  amount  of  deferred 
premiums;  (11)  All  other  assets,  specifying  the  same. 

Liabilities. 

Third — (1)  Claims  for  death  losses  and  matured  endowments  due  and 
unpaid;  (2)  Claims  for  death  losses  and  matured  endowments  in  process 
of  adjustment  or  adjusted  and  not  due;  (3)  Claims  resisted  by  the 
company;  (4)  Amounts  due  and  unpaid  on  annuity  claims;  (5)  Trust 
funds  on  deposit  or  net  present  value  of  all  outstanding  policies,  com- 
puted according  to  the  American  Experience  Table  of  Mortality,  wkh 
interest  at  the  rate  of  four  and  one  half  per  cent  per  annum  upon  all 
outstanding  risks  written  prior  to  January  1st,  1892,  and  according  to 
the  Combined  Experience  or  Actuaries'  Table  of  Mortality  with  interest 
at  the  rate  of  four  per  cent  per  annum  upon  all  outstanding  risks  written 
.from  and  after  the  31st  day  of  December,  1891,  up  to  and  including  the 
31st  day  of  December,  1907,  and  according  to  the  American  Experience 
Table  of  Mortality  with  interest  at  the  rate  of  three  and  one  half 
per  cent  per  annum  upon  all  outstanding  risks  written  from  and  after 
December  31st,  1907;  (6)  Additional  trust  fund  on  deposit,  or  net 
present  value  of  extra  and  special  risks,  including  those  on  impaired 
lives ;  (7)  Amount  of  all  unpaid  dividends  of  surplus  percentage  bonuses. 
and  other  description  of  profits  to  policyholders,  and  interest  thereon; 
(8)  Amount  of  any  other  liability  to  policyholders  or  annuitants  not 
included  above. 

Income. 

Fourth — (1)  Cash  received  for  premiums  on  new  policies  during  the 
year;  (2)  Cash  received  for  renewal  of  premiums  during  the  year; 
(3)  Cash  received  for  purchase  of  annuities;  (4)  Cash  received  for  all 
other  premiums;  (5)  Cash  received  for  interest  on  loans,  specifying  the 
same;  (6)  Rents  received;  (7)  Cash  received  from  all  other  sources, 
specifying  the  same;  (8)  Gross  amount  of  notes  taken  on  account  of 
new  premiums;  (9)  Gross  amount  of  notes  taken  on  account  of  renewal 
premiums. 

Expenditures. 

Fifth— (1)  Cash  paid  for  losses ;  (2)  Cash  paid  to  annuitants ;  (3)  Cash 
paid  for  lapsed,  surrendered,  and  purchased  policies;  (4)  Cash  paid 
for  dividends  to  policyholders;  (5)  Cash  paid  for  dividends  to  stock- 
holders ;  (6)  Cash  paid  for  reinsurances ;  (7)  Commission  paid  to  agents ; 
(8)  Salaries  and  other  compensation  of  officers  and  employees,  except 


INSURANCE    COMMISSIONER POWERS   AND   DUTIES.  31 

auvnts  and  medical  examiners  ;  (9)  Medical  examiners'  fees  and  salaries  ; 
(10)  Cash  paid  for  taxes;  (11)  Cash  paid  for  rents;  (12)  Cash  paid  for 
commuting  commissions;  (13)  All  other  cash  payments. 

Sixth — Balance  sheet  of  premium  note  account. 

8f<  r<  nth — Balance  sheet  of  all  the  business  of  the  company. 

Eighth — (1)  Total  amount  of  insurance  effected  during  the  year  on 
new  policies;  (2)  Total  amount  of  insurance  effected  during  the  year  in 
the  State  of  California;  (3)  Premiums  receiyed  during  the  year  on  busi- 
ness dene  in  the  State  of  California. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted. 
Slats.  1907,  p.  157. 

Mutual  companies. 

Sec.  614.  Mutual  companies  formed,  existing,  and  doing  business 
under  an  act  entitled  "An  act  to  provide  for  the  incorporation  of  mutual 
insurance  companies,"  passed  April  twenty-sixth,  eighteen  hundred  and 
fifty-one,  may  report  their  approved  stock  as  capital  paid  up,  and  such 
notes-  for  all  purposes  must  be  deemed  part  of  the  paid-up  capital  stock 
of  such  corporation. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  159. 

Furnishing  statement  forms. 

Sec.  615.  The  insurance  commissioner  must  cause  to  be  prepared, 
and  furnish  on  demand  to  each  of  the  companies  printed  forms  of  the 
statements  herein  required;  and  he  may  make  such  changes  from  time 
to  time  in  the  form  of  such  statements  and  reports  as  seems  to  him  best 
adapted  to  elicit  from  the  companies  a  true  exhibit  of  their  condition. 
The  same  forms  must  be  so  furnished  on  demand  to  all  companies 
engaged  in  the  same  kind  of  business. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  159. 

Designation  of  principal  agent  and  stipulation  for  service  of  papers. 

Sec.  (>1(>.  The  insurance  commissioner  must  require,  as  a  condition 
precedent  to  the  transaction  of  insurance  business  in  this  state  by  any 
foreign  insurance  company,  that  such  company  file  in  his  office  a  writing 
designating  the  name  of  an  agent,  and  his  place  of  business  in  this  state, 
on  whom  any  notice  provided  by  law  or  by  any  insurance  policy,  proof 
of  loss,  summons,  and  other  process  may  be  served  in  all  actions  or  other 
legal  proceeding  against  such  company.  All  notices,  proof  of  loss,  sum- 
mons or  other  process  so  served  give  jurisdiction  over  the  person  of  such 
company.  The  agent  so  appointed  and  designated  shall  be  deemed  in 
law  a  general  agent,  and  must  be  the  principal  agent  of  such  company 
in  this  state;  any  such  foreign  company  shall,  as  a  further  condition 
precedent  to  the  transaction  of  insurance  business  in  this  state,  and  in 
consideration  of  the  privilege  to  transact  such  insurance  business  in  this 
state,  make  and  file  with  the  insurance  commissioner  an  agreement  or 
stipulation,  executed  by  the  proper  authorities  of  such  company,  in  form 
and  substance  as  follows:  The  (giving  name  of  company)  does  hereby 
stipulate  and  agree  that,  in  consideration  of  the  permission  granted  by 
tli.'  State  of  California  to  it  to  transact  insurance  business  in  this  state, 


32  INSURANCE   LAWS   OP   CALIFORNIA. 

that  if  at  any  time  said  company  shall  leave  this  state  or  cease  to 
transact  business  in  this  state  or  shall  be  without  an  agent  in  said  state, 
on  whom  any  notice,  proof  of  loss,  summons,  or  other  legal  process  may 
be  served,  then  in  any  action  or  proceeding  arising  out  of  any  business 
or  transactions  which  occurred  in  this  state,  service  of  any  notice  pro- 
vided by  law,  or  insurance  policy,  proof  of  loss,  summons,  or  other  legal 
process  may  be  made  upon  the  insurance  commissioner,  and  that  such 
service  upon  the  commissioner  shall  have  the  same  force  and  effect  as  if 
made  upon  the  company.  Whenever  such  service  of  notice,  proof  of 
loss,  summons,  or  other  legal  process  shall  be  made  upon  the  insurance 
commissioner,  he  must,  within  ten  days  thereafter,  transmit  by  mail, 
postage  paid,  a  copy  of  such  notice,  proof  of  loss,  summons,  or  other 
legal  process  to  the  company,  addressed  to  the  manager,  president,  or 
secretary  thereof  at  its  home  or  principal  office.  The  sending  of  such 
copy  by  the  commissioner  shall  be  a  necessary  part  of  the  service  of  the 
notice,  proof  of  loss,  summons,  or  other  legal  process. 

When  any  notice,  summons,  or  other  legal  process  is  served  upon  the 
insurance  commissioner  pursuant  to  the  provisions  of  this  section,  the 
service  as  to  the  company  shall  be  deemed  complete  at  the  end  of 
sixty  (60)  days  after  the  date  of  the  delivery  of  the  notice^  summons. 
or  other  process  to  the  insurance  commissioner. 

When  any  notice,  provided  by  law  or  by  any  Insurance  policy,  is  to 
be  served  on  the  agent  designated,  as  in  this  section  provided,  such 
service  may  be  made  as  provided  in  chapter  V,  part  II,  title  XIV  of  the 
Code  of  Civil  Procedure. 

Enacted  March  12,  1872.  Amended,  Stats.  1S7:M4.  p.  63;  1877-78, 
p.  17.     Repealed  and  present  section  enacted.  Stats.  1!M)7.  p.  159. 

A  motion  to  dismiss  an  appeal  upon  the  ground  thai   the  undertaking  on  appeal 

was  executed  by  the  American  Surety  Company,  a  foreign  corporation,  which  had 
failed  to  file  with  the  secretary  of  state  a  designation  of  some  person  residing  in  this 
state  upon  whom  service  of  summons  may  be  made,  as  required  by  the  act  of  April  1, 
1S72  (Stats.  1871-72,  p.  S2G).  was  denied,  because  it  appeared  from  the  certificate 
of  the  insurance  commissioner  that  the  company  was  duly  authorized  to  transact 
business  in  this  state,  section  1056  of  the  Code  of  Civil  Procedure  providing  that 
he  should  have  the  same  jurisdiction  over  such  companies  as  he  had  over  others. 
(Gutzeil  vs.  Pennie,  95  Cal.  ~>9S.) 

To  the  same  effect  is  the  case  of  Ha  nit/an  vs.  Home  Life  Insurance  Companu. 
128  Cal.  540. 

See  Commercial  Union  Assurance  Company  vs.  Wolf,  8  Cal.  App.  413-420. 

A  foreign  insurance  company  which,  in  compliance  with  the  laws  of  the  state 
appoints  an  agent  therein  upon  whom  service  may  be  made  distinctly  agrees  with 
the  people  of  the  state  that  summons  and  other  process  may  be  served  upon  it  in  all 
actions  or  legal  proceedings  against  the  company,  and  that  all  process  so  served  gives 
jurisdiction  over  the  person  of  the  company.  For  all  purposes  of  legal  proceedings 
the  company  is.  therefore,  an  "inhabitant"  of  the  state,  (tihainwald  vs.  Davids  et  al., 
69  Fed.  Rep.  704.) 

A  foreign  insurance  company  doing  business  in  the  state,  may  be  served  with 
process  under  Code  of  Civ.  Proc,  sec.  411,  subd.  2,  which  provides  generally  for 
serving  foreign  corporations,  or  service  may  be  made  under  sec.  016  of  the  Pol.  Code, 
if  it  has  filed  with  the  insurance  commissioner  the  name  of  its  agent  upon  whom 
process  may  be  served  and  an  agreement  that,  should  it  at  any  time  be  without  such 
agent  process  against  it  may  be  served  on  the  commissioner,  but  substituted  service 
on  the  commissioner  is  authorized  only  when  the  company  is,  by  resignation,  revoca- 
tion, or  otherwise,  without  the  agent  specified  in  the  latter  section.  {Buckingham  tl 
n< cht  vs.  North  German  Fire  Insurance  Company  of  New  York,  149  Fed.  Rep.  622.) 

It  is  apparent  from  the  nature  of  this  section  that  in  so  far  as  the  appointment  of 
agent  in  this  state  is  concerned,  the  same  is  subject  to  revocation  or  substitution  at 
any  time  by  the  company,  and  that  an  appointment  once  made  by  the  company  con- 
tinues until  revocation  of  the  same  is  made  irrespective  of  the  number  of  years  such 
company  continues  in  business.  The  stipulation  by  its  terms  continues  during  the 
time  such  company  transacts  and  after  such  company  ceases  to  transact  insurance 
business  in  this  state.     It  is  an  irrevocable  contract  entered  into  with  the  state  and 


INSURANCE   COMMISSIONER — POWERS   AND   DUTIES.  33 

covers  both  the  period  during  which  such  company  may  enjoy  a  license  and  all  time 
thereafter.  It  furthermore  covers  any  period  when  such  company  may  be  without 
the  agent  in  the  state  contemplated  by  the  section  :  Opinion  of  the  Attorney  General, 
June  SO,  190S. 

Service  Is  Constructive. — Service  upon  the  secretary  of  state  is  not,  in  ordinary 
rases,  to  be  considered  tantamount  to  personal  service  upon  a  corporation,  as  distin- 
guished from  constructive  service.  If  such  had  been  intended  in  all  cases,  the  legisla- 
ture would  undoubtedly  have  so  provided,  as  it  has  provided  in  the  case  of  foreign 
insurance  companies.  (Holiness  Church  of  San  Jose  vs.  Metropolitan  Church  Assn., 
12  CaL  App.  445,  448,  107  Pac.  G33.) 

Penalty  for  failure  to  file  statements. 

SBC.  (ill.  The  commissioner  must  collect  the  sum  of  one  hundred 
dollars  from  any  company  engaged  in  the  business  of  insurance  in  this 
state,  for  a  wilful  failure  to  make  and  file  in  his  office  within  the  time 
prescribed  by  law,  any  statements  or  stipulations  required  by  this  title, 
and  an  additional  penalty  of  two  hundred  dollars  for  each  and  every 
month  or  fractional  part  of  a  month  thereafter,  that  such  company 
continue  to  transact  the  business  of  insurance  until  such  statements  and 
stipulations  are  filed. 

Enacted  March  12,  1872.  Amended,  Stats.  1873-4,  p.  65 ;  1877-8,  p.  18 ; 
1  ^s7.  p.  11.     Repealed  and  present  section  enacted,  Stats.  1907,  p.  160. 

A  company  which  has  written  no  new  business  during  the  preceding  year  and 
which  has  ceased  writing  business  in  the  state  is  not  subject  to  the  penalty  prescribed 
by  section  617  of  the  Political  Code  for  failing  to  file  its  annual  statement:  Opinion 
of  the  Attorney  General,  June  1J/,  1909. 

General  provisions  for  deposits. 

Sec.  618.  "Whenever  the  laws  of  any  state  of  the  United  States,  or  of 
any  country  foreign  to  the  United  States,  require  any  insurance  com- 
pany organized  under  the  laws  of  this  state,  to  deposit  with  some  officer 
of  this  state  securities  in  trust  for,  and  for  the  benefit  of,  the  policy- 
holders of  such  company,  as  a  prerequisite  to  transacting  insurance 
business  in  such  other  state  or  foreign  country,  and  whenever  under 
any  laws  of  this  state  any  insurance  company  is  required  to  deposit  with 
any  officer  of  this  state  securities  in  trust  for,  and  for  the  benefit  of 
policyholders  of  such  company,  the  insurance  commissioner  of  this  state 
m nst  receive  from  such  company  securities  in  the  amount  required  by 
the  law  under  which  such  deposit  is  made  on  deposit  and  in  trust  for 
the  poj  ieyholders  of  such  company.  None  of  such  securities  so  deposited 
in i ist  be  estimated  above  the  par  value  of  the  same,  nor  above  their 
market  value.  The  insurance  commissioner  must,  upon  the  receipt  of 
such  securities,  forthwith  make  a  special  deposit  of  the  same  in  the  state 
treasury,  in  packages  marked  with  the  name  of  the  company  from  whom 
i -i  reived,  where  they  must  remain  as  security  for  policyholders  in  the 
company  to  whom  they  respectively  belong;  but  so  long  as  the  company 
continues  solvent  he  must  permit  it  to  collect  the  interest  or  dividends 
on  the  securities  so  deposited,  and  from  time  to  time  to  withdraw  any 
such  securities  on  depositing  other  securities  in  the  stead  of  those  to  be 
withdrawn.  Such  new  securities  to  be  of  the  same  value  and  character 
mentioned  in  this  section,  but  such  securities  must  not  be  withdrawn 
from  the  state  treasury  unless  upon  the  written  order  of  the  company 
making  the  deposits,  which  order  must  be  indorsed  by  the  commissioner, 
or  upon  the  order  and  authority  of  some  court  of  competent  jurisdiction. 
If  the  deposit  is  of  mortgages,  it  shall  be  accompanied  by  full  abstracts 
of  title  or  policies  of  title  insurance  or  certificates  of  title  issued  by  a 

3— IL 


34  INSURANCE   LAWS   OF    CALIFORNIA. 

duly  organized  title  insurance  company  authorized  to  transact  business 
under  the  laws  of  California,  and  the  fees  for  examination  of  title,  unless 
accompanied  by  such  certificates  of  title  or  policies  of  title  insurance, 
and  the  fees  for  appraisal  of  property  shall  be  paid  by  the  company 
making  the  deposit.  If  the  deposit  is  of  stocks  or  bonds,  it  shall  be 
accompanied  by  the  fees  necessary  for  the  appraisal  thereof. 

Enacted  March  12,  1872.  Amended,  Stats.  1877-78,  p.  18.  Repealed 
and  present  section  enacted,  Stats.  1907,  p.  160.  Amended,  Stats.  1909, 
p.  909. 

Certificate  of  deposit. 

Sec.  619.  Whenever  an  insurance  company  has  deposited  with  the 
commissioner  the  requisite  security,  in  conformity  with  the  requirements 
of  the  preceding  section,  the  commissioner  must  issue  to  such  company 
a  certificate,  under  his  official  seal,  of  such  deposit,  for  each  state  or 
country  requiring  the  same,  which  said  certificate  must  state  the  items 
and  amount  of  securities  so  deposited,  and  that  they  are  of  the  value 
therein  represented.  # 

Enacted  March  12,  1872.  Amended,  Stats.  1877-8,  p.  19.  Repealed 
and  present  section  enacted,  Stats.  1907,  p.  161. 

Withdrawal  of  deposit. 

Sec.  620.  Whenever  any  insurance  company  so  depositing  securities 
with  the  commissioner  has  paid,  canceled,  or  reinsured  all  its  unexpired 
policies  outstanding  in  the  state,  satisfactorily  to  the  insurance  commis- 
sioner, and  all  its  liabilities  under  such  policies  are  extinguished,  or 
assumed  by  other  responsible  companies  or  corporations,  then,  if  on 
application  of  such  company,  duly  verified,  and  from  an  examination 
of  the  books  of  the  company,  and  of  its  officers  under  oath,  the  insurance 
commissioner  is  satisfied  that  all  of  its  policies  are  so  paid,  canceled, 
extinguished,  or  reinsured,  he  must  deliver  up  to  the  company  the 
securities  deposited;  provided,  however,  that  pending  such  examination 
the  securities  requested  to  be  withdrawn  may  at  the  discretion  of  the 
commissioner  be  delivered  to  the  depositor  upon  the  condition  that  the 
applicant  deposit  with  the  commissioner  securities  of  like  value;  and 
whenever  the  laws  of  any  other  state  or  country,  by  reason  of  which 
section  622  of  the  Political  Code  of  this  state  is  brought  into  force,  shall 
be  repealed  and  abrogated,  then  any  deposit  which  shall  have  been  made 
with  the  commissioner,  under  and  by  reason  of  said  section  622  of  the 
Political  Code,  must  be  delivered  up  to  the  company  making  the  deposit. 

Enacted  March  12,  1872.     Amended,  Stats.  1877-8,  p.  19.     Repealed 

and  present  section  enacted,  Stats.  1907,  p.  161. 

See  opinion  of  attorney  for  insurance  commissioner,  November  12,  1913,  holding, 
contract  of  reinsurance  sufficient  to  entitle  policyholder  to  maintain  an  action  against 
reinsuring  company,  and  to  permit  company  reinsured  to  withdraw  deposit  of  security 
made  with  the  State  of  California. 

Annual  examination  of  securities. 

Sec.  621.  The  commissioner  must  make  an  annual  examination  of  the 
securities  received  by  him  from  each  insurance  company,  and  if  it  appear 
at  any  time  that  the  securities  deposited  by  any  such  company  amount 
to  less  than  the  sum  required  for  the  purposes  for  which  the  deposit  was 
made,  he  must  notify  the  company  thereof,  and  unless  the  deficiency  is 


INSURANCE    COMMISSIONER — POWERS   AND   DUTIES.  35 

made  up  within  thirty  days  after  notice,  the  commissioner  must  revoke 
the  certificate  of  authority  previously  granted  and  countermand  all  the 
certificates  he  may  have  issued  to  the  company  under  this  chapter,  and 
give  notice  thereof  to  the  officers  of  the  several  states  to  whom  the  cer- 
tificate may  have  been  transmitted. 

Enacted*  March  12,  1872.  Amended,  Stats.  1877-8,  p.  19.  Repealed 
and  present  section  enacted,  Stats.  1907,  p.  161. 

Applying  foreign  discrimination  law. 

Sec.  622.  When  by  the  laws  of  any  other  state  or  country,  any  taxes, 
lines,  penalties,  licenses,  fees,  deposits  of  money  or  of  securities,  or  other 
obligations  or  prohibitions,  are  imposed  on  insurance  companies  of  this 
state  doing  business  in  such  other  state  or  country,  or  upon  their  agents 
therein,  in  excess  of  such  taxes,  fines,  penalties,  licenses,  fees,  deposits 
of  securities,  or  other  obligations  or  prohibitions,  imposed  upon  insurance 
companies  of  such  other  state  or  country,  so  long  as  such  laws  continue 
in  force,  the  same  obligations  and  prohibitions  of  whatsoever  kind  must 
be  imposed  upon  insurance  companies  of  such  other  state  or  country 
doing  business  in  this  state.  And  whenever  under  this  section  any 
deposit  of  security  shall  be  made  in  this  state,  such  deposit  shall  be  made 
in  bonds  of  the  United  States  Government,  or  in  those  of  the  State  of 
California,  or  in  interest-bearing  bonds  of  any  of  the  counties  or  incor- 
porated cities  and  towns  of  the  State  of  California,  not  in  default  for 
interest  on  such  bonds,  which  said  securities  must  be  estimated  at  not 
exceeding  their  par  value  nor  their  market  value. 

Enacted  March  12,  1872.  Amended,  Stats.  1873-4,  p.  11;  1877-8,  p.  22; 
1897,  p.  242.     Repealed  and  present  section  enacted,  Stats.  1907,  p.  162. 

When  the  act  of  March  3,  1885  (Stats.  1885,  p.  15),  was  passed  requiring  the 
payment  of  certain  premiums  to  counties  and  cities  and  counties  by  fire  insurance 
companies  not  organized  under  the  laws  of  California,  the  conditions  on  which  such 
foreign  corporations  could  do  business  were  prescribed,  and  very  full  provision  had 
heen  made  l>v  the  Political  Code,  sections  622-624,  and  the  legislature  had  no  power  to 
impose  the  premiums  mentioned.,  as  the  same  do  not  constitute  a  condition  precedent 
to  their  rignl  to  do  business  in  this  state,  but  on  the  contrary,  by  a  special  law  a 
tax  is  created  upon  these  corporations,  alone,  discriminatory  in  its  nature,  and  conse- 
quently unconstitutional.  (San  Francisco  vs.  Liverpool,  L.  &  G.  Ins.  Co.,  74  Cal. 
113.) 

See  Liverpool,  London  &  Globe  Insurance  Company  et  al.  vs.  Clunie,  88  Fed. 
Rep.  160-176. 

Tax.    . 

Sec.  622a.  Every  insurance  company  other  than  life,  not  organized 
or  incorporated  under  the  laws  of  California,  and  doing  business  in 
this  state,  and  every  other  insurance  company  other  than  life,  whose 
charter  may  be  owned,  or  a  majority  of  whose  stock  may  be  controlled, 
or  whose  business  may  be  carried  on  in  the  interest,  or  for  the  benefit 
of  any  insurance  company  or  association  not  organized  or  incorporated 
under  the  laws  of  California,  shall  annually  pay  to  the  insurance  com- 
missioner, for  the  state,  a  tax  of  two  (2)  per  cent  upon  the  amount  of 
the  gross  premiums  received  upon  its  business  done  in  the  state,  during 
the  year  ending  on  the  preceding  thirty-first  day  of  December,  less 
return  premiums,  reinsurance  in  companies  authorized  to  do  business 
in  this  state,  and  losses  actually  paid  on  its  business  in  this  state,  and 
every  life  insurance  company  not  organized  or  incorporated  under  the 
laws  of  California,  which  does  business  or  collects  premiums  or  assess- 


36  INSURANCE  LAWS  OF   CALIFORNIA. 

merits  in  the  state,  shall  annually  pay  to  the  insurance  commissioner,  for 
the  state,  a  tax  of  one  per  cent  upon  the  amount  of  the  gross  premiums 
received  upon  its  business  done  in  this  state  during  the  year  ending  on 
the  preceding  thirty-first  day  of  December.  This  section  shall  not  be 
held  or  construed  so  as  to  relieve  any  company  or  organization  from  any 
tax,  fee  or  other  obligation  or  charge  imposed  upon  it  by  the  provisions 
of  section  622  of  this  code,  and  whenever  the  taxes  imposed  by  the  appli- 
cation of  section  622  exceed  those  imposed  by  the  application  of  this 
section  the  provisions  of  the  former  section  shall  prevail. 

Enacted,  State.  1903,  p.  359.  Amended,  Stats.  1905,  p.  136.  Repealed 
and  present  section  enacted,  Stats.  1907,  p.  162. 

See,  post,  section  3  of  act  to  carry  into  effect  the  provisions  of  section  fourteen  of 
article  thirteen  of  the  constitution,  etc.,  approved  April  1,  1911. 

The  use  of  the  words  "its  business"  found  in  the  statute  above  cited,  undoubtedly 
comprehends  all  of  the  classes  of  insurance  which  the  corporation  is  licensed  to 
transact,  and  in  estimating  the  tax  for  which  each  company  is  liable,  I  am  of  the 
opinion  that  the  tax  is  to  be  estimated  upon  the  aggregate  of  the  gross  premiums 
received  by  the  company  from  all  of  the  branches  or  classes  of  insurance  that  it 
transacts :  Opinion  of  the  Attorney  General,  September  3,  1908. 

Bond  of  company. 

Sec.  623.  The  commissioner  must  require  every  company,  not  incor- 
porated under  the  laws  of  this  state,  now  transacting  or  proposing  to 
transact  insurance  business  by  agent  or  agents  in  this  state,  before  com- 
mencing such  business  to  file  in  his  office  a  bond  in  favor  of  the  people 
of  the  State  of  California,  to  be  signed  by  the  company,  as  principal, 
with  two  sureties,  to  be  approved  by  the  commissioner,  in  the  penal  sum 
of  twenty  thousand  dollars,  the  condition  of  such  bonds  to  be  as  follows : 
(1)  That  the  company  and  its  agents  will  pay  all  state,  county,  and 
municipal  property  and  license  taxes,  in  the  manner  and  at  the  time 
prescribed  by  law;  (2)  that  the  company  named  therein  will  conform 
to  all  the  provisions  of  the  revenue  and  other  laws  made  to  govern  them ; 
(3)  and  that  the  company  will  promptly  pay  all  fees,  assessments,  taxes, 
penalties,  and  fines  that  may  be  laid  upon  or  against  such  company. 
Such  bonds  may  be  sued  on  in  the  same  manner  and  shall  be  subject 
to  the  same  rules  governing  official  bonds. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  163. 

See  Commercial  Union  Assurance  Company  vs.  Wolf,  S  Cal.  App.  413-16 ;  Liver- 
pool, London  &  Globe  Insurance  Company  et  al.  vs.  Clunie,  88  Fed.  Rep.  160-166-173. 

The  bond  must  be  given  "before  commencing  such  business,"  lives  and  dies  with 
the  term  of  the  license  to  which  it  related  and  upon  which  it  is  predicated,  and  upon 
a  renewal  of  the  license  there  must  be  a  renewal  of  the  bond  required  by  section  623 
of  the  Political  Code :  Opinion  of  the  Attorney  General,  June  30,  1908. 

Bond  containing  proper  continuation  Clause,  making  such  bond  applicable  alike  to 
the  first  and  all  subsequent  license  periods  for  which  renewals  of  certificates  of 
authority  are  issued,  is  held  to  cover  subsequent  license  periods  without  a  renewal 
of  such  bond. 

Separate  bonds. 

Sec.  624.  Whenever  the  same  company  desires  to  collect  premiums 
of  insurance  for  more  than  one  company,  the  commissioner  must 
require  a  separate  bond,  as  provided  in  the  preceding  section,  for  each 
company  so  represented  by  such  company. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  163. 

San  Francisco  vs.  Liverpool,  London  &  Globe  Insurance  Company,  74  Cal.  113. 
See  note  to  section  622,  Political  Code,  ante. 


INSURANCE   COMMISSIONER — POWERS   AND   DUTIES.  37 

Furnishing  information  to  assessors. 

Sec.  625.  The  commissioner  must,  before  the  commencement  of  each 
fiscal  year  as  fixed  in  the  revenue  laws,  furnish  the  assessor  of  the 
county  in  which  the  principal  office  of  any  company  doing  business  of 
insurance  is  situated,  all  the  data  concerning  premiums  collected  by  and 
all  other  necessary  information  in  relation  to  the  business  of  such  com- 
pany as  will  assist  the  assessor  in  the  performance  of  his  duties. 

Enacted  March  12.  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  163. 

Listing  surety  companies  to  county  clerks. 

Sec.  625<7.  The  insurance  commissioner  of  the  State  of  California 
must  make  up  and  certify  to  the  county  clerk  of  each  county  of  this 
state  a  complete  list  of  all  corporations  engaged  in  the  business  of 
making,  guaranteeing  or  becoming  a  surety  upon  bonds  or  undertakings 
required  or  authorized  by  law,  holding  certificates  of  authority  to  trans- 
act such  business  in  this  state,  which  list  shall  set  forth: 

( 1 )  The  full  corporate  name  of  such  corporation ; 

(2)  The  name  of  the  state,  territory  or  country  under  whose  laws 
such  corporation  is  organized; 

(3)  The  date  of  the  certificate  of  authority  issued  to  such  corporation 
to  transact  such  a  business  in  this  state. 

From  and  after  the  date  when  the  list  aforesaid  shall  have  been  certi- 
fied as  hereinbefore  provided,  the  said  insurance  commissioners  shall 
likewise  certify  to  the  county  clerk  of  each  county  of  this  state,  the  same 
facts  concerning  any  other  corporation  thereafter  authorized  to  transact 
such  business  in  this  state. 

Whenever  the  certificate  of  authority  of  any  such  corporation  to  do 
business  in  this  state  shall  for  any  reason  be  surrendered,  revoked,  can- 
celed, or  annulled,  or  whenever  the  said  certificate  of  any  such  corpora- 
tion has  been  suspended  as  provided  in  section  1056  of  the  Code  of  Civil 
Procedure  of  this  state,  or  whenever  any  such  corporation  whose  certifi- 
cate of  authority  has  been  so  suspended,  again  becomes  authorized  in 
law  to  do  business  in  this  state  under  such  certificate  of  authority,  the 
insurance  commissioner  of  this  state  shall  forthwith  certify  to  the 
county  clerk  of  each  county  of  this  state,  the  name  of  such  corporation, 
and  the  date  of  such  surrender,  revocation,  cancellation,  annulment  or 
suspension,  or  of  renewed  authority  to  act  under  such  certificate. 

Enacted,  Stats.  1907.  p.  977. 

Complying  with  Civil  Code. 

Sec.  626.  The  commissioner  must  require  from  every  company, 
before  and  after  engaging  in  the  business  of  insurance,  a  full  compliance 
with  all  the  provisions  of  title  two,  part  four,  division  one,  of  the  Civil 
Code  applicable  thereto;  and  every  company  neglecting  to  comply  with 
such  requirements  is  subject  to  the  fines  and  penalties  therein  prescribed. 

Enacted  March  12.  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  163. 

Bee  civil  Code,  lection  414-4f>o.  pout. 

Computations  and  payments  on  gold  basis. 

Sec,  627.  All  statements,  estimates,  percentages,  payments,  and  cal- 
culations, required  by  this  chapter  to  be  made,  either  by  the  commis- 


38  INSURANCE   LAWS   OP    CALIFORNIA. 

sioner  or  companies,  must  be  made  on  the  basis  of  gold  coin  of  the  United 
States. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  163. 

Special  valuation  of  policies  of  life  insurance  companies. 

Sec.  628.  When  the  certificate  of  the  insurance  commissioner  of  this 
state,  of  the  valuation  of  the  policies  of  a  life  insurance  company,  as  pro- 
vided in  the  next  section  of  this  code,  issued  to  any  company  organized 
under  the  laws  of  this  state,  shall  not  be  accepted  by  the  insurance 
authorities  of  any  other  state,  in  lieu  of  a  valuation  of  the  same,  by  the 
insurance  officer  of  such  other  state,  then  every  company  organized 
under  the  laws  of  such  other  state  doing  business  in  this  state,  shall  be 
required  to  have  a  separate  valuation  of  its  policies  made  under  the 
authority  of  the  insurance  commissioner  of  this  state,  as  provided  in  the 
next  section. 

Enacted,  Stats.  1907,  p.  163.     Formerly  section  449,  Civil  Code. 

Old  section  628,  Pol.  Code,  is  now  numbered  589. 

General  valuation  of  policies  of  life  insurance  companies. 

Sec.  629.  Every  life  insurance  corporation  organized  under  the  laws 
of  this  state  must,  on  or  before  the  first  day  of  February  of  each  year, 
furnish  the  insurance  commissioner  the  necessary  data  for  determining 
the  valuation  of  all  its  policies  outstanding  on  the  thirty-first  day  of 
December  then  next  preceding.  And  every  life  insurance  company 
organized  under  the  laws  of  any  other  state  or  country,  and  doing  busi- 
ness in  this  state,  must,  upon  the  written  requisition  of  the  commissioner, 
furnish  him,  at  such  time  as  he  may  designate,  the  requisite  data  for 
determining  the  valuation  of  all  its  policies  then  outstanding;  such 
valuations  must  be  based  upon  the  rate  of  mortality  established  by  the 
American  Experience  Life  Table,  and  interest  at  four  and  one  half  per 
cent  per  annum  on  all  outstanding  risks  written  prior  to  January  first, 
eighteen  hundred  and  ninety-two,  and  such  valuations  must  be  based 
upon  the  rate  of  mortality  established  by  the  Combined  Experience  or 
Actuaries'  Table  of  Mortality  with  interest  at  the  rate  of  four  per  cent 
per  annum  on  all  outstanding  risks  written  from  and  after  the  thirty- 
first  day  of  December,  A.  D.  one  thousand  eight  hundred  and  ninety-one, 
up  to  and  including  the  thirty-first  day  of  December,  one  thousand  nine 
hundred  and  seven,  and  such  valuations  must  be  based  upon  the  rate  of 
mortality  established  by  the  American  Experience  Table  of  Mortality 
with  interest  at  the  rate  of  three  and  one  half  per  cent  per  annum  on  all 
outstanding  risks  written  from  and  after  December  thirty-first,  nine- 
teen hundred  and  seven.  "When  the  laws  of  any  other  state  or  territory 
require  of  a  life  insurance  company  organized  under  the  laws  of  this 
state  a  valuation  of  its  outstanding  policies  by  any  standard  of  valuation 
different  from  that  named  in  this  section,  the  insurance  commissioner 
is  hereby  authorized  to  make  such  valuation  for  use  in  such  other  state 
or  territory,  and  to  issue  his  certificate  in  accordance  therewith.  For 
the  purpose  of  making  the  valuations,  the  insurance  commissioner  is 
authorized  to  employ  a  competent  actuary,  whose  compensation  for  such 
valuations  shall  be  one  c#nt  for  each  thousand  dollars  of  insurance,  to 
be  paid  by  the  respective  companies  whose  policies  are  thus  valued. 

Enacted,  Stats.  1907..  p.  164.     Formerly  section  447,  Civil  Code. 

Old  section  629,  Pol.  Code,  is  now  numbered  589. 


INSURANCE    COMMISSIONER POWERS   AND   DUTIES.  39 

Secret  and  fraternal  societies. 

Sec.  630.  Secret  or  fraternal  societies,  lodges,  or  councils  incorpo- 
rated or  organized  for  the  purpose  of  mutual  protection  and  relief  of 
their  members  and  for  the  payment  of  stipulated  sums  of  money  to  their 
members  or  to  the  beneficiaries  of  deceased  members  which  conduct 
their  business  and  secure  membership  on  the  lodge  system  exclusively, 
having  ritualistic  work  and  ceremonies  in  their  societies,  lodges,  or 
councils,  and  all  mutual  or  benefit  associations,  organized  or  formed  and 
composed  of  members  of  any  such  society,  lodge  or  council  exclusively, 
are  exempt  from  the  provisions  of  all  the  insurance  laws  of  this  state. 

Enacted.  Stats.  1907,  p.  164  takes  the  place  of,  although  differing  in 
important  respects  from  section  451,  Civil  Code,  repealed  at  the  same 
time. 

Old  section  630  is  now  numbered  591. 

See  Perkins  vs.  Fish.  121  Cal.  319-321 :  Marshall  vs.  Grand  Lodge,  A.  0.  TJ.  W., 
133  Cal.  686;  Lyon  vs.  United  Moderns,  148  Cal.  471. 

See  opinion  attorney  for  insurance  commissioner,  May  26,  1911,  defining  nature 
of  insurance  business  and  holding  action  by  the  Mutual  Assistance  Association  to  be 
the  transaction  of  insurance  business. 

Reviewing  commissioner's  act. 

Sec,  631.  If  at  any  time  the  insurance  commissioner  revokes  the  cer- 
tificate of  authority  theretofore  granted  to  any  insurance  company,  or 
refuses  to  grant  a  certificate  of  authority  to  any  insurance  company, 
any  interested  person  or  company  may  commence  an  action  against  the 
insurance  commissioner  for  the  purpose  of  reviewing  the  facts  and  the 
law  pertinent  to  the  controversy  and  for  the  purpose  of  obtaining  the 
relief  refused  or  for  cancelling  the  action  of  the  commissioner.  In  any 
sueli  action  the  court,  shall  have  full  power  to  investigate  all  the  facts 
<1<  novo  without  regard  to  the  determinations  previously  made  by  the 
commissioner.  In  the  trial  of  such  actions  all  of  the  provisions  of  the 
Code  of  Civil  Procedure,  not  inconsistent  herewith,  shall  be  applicable. 

Enacted.  Stats.  1907,  p.  164. 

Old  section  631,  Pol.  Code,  is  now  numbered  592. 

Publication  of  notice  of  withdrawal. 

Sec.  631".  Whenever  any  insurance  company  shall  have  withdrawn 
from  business  in  this  state,  and  whenever  for  any  reason  the  insurance 
commissioner  shall  have  revoked  or  cancelled  the  certificate  of  authority 
authorizing  any  insurance  company  to  do  business  in  this  state,  the 
insurance  commissioner  shall  cause  to  be  published,  in  each  of  two  daily 
newspapers,  one  published  in  San  Francisco  and  one  published  in  Sacra- 
mento, a  notice  of  such  revocation  or  of  such  withdrawal.  The  expense 
of  such  publication  shall  be  paid  in  advance  by  the  insurance  company 
withdrawing  or  whose  certificate  shall  have  been  so  revoked. 

Enacted,  Stats.  1907,  p.  165.  Practically  new  section  added  in  1907; 
but  see  old  section  595. 

Informing  district  attorneys. 

Sec.  632.  "Whenever  the  insurance  commissioner  ascertains  that  any 
insurance  company,  or  any  of  its  agents,  officers,  or  employees,  or  any 
other  person  has  been  guilty  of  violating  any  of  the  penal  statutes  of  this 


40  INSURANCE   LAWS   OF    CALIFORNIA. 

state,  the  commissioner  shall  certify  such  facts  to  the  district  attorney  of 
the  county  in  which  such  offense  was  committed.  Such  offenses  shall  be 
prosecuted  and  tried  in  all  respects  as  provided  in  the  Penal  Code.  For 
the  purpose  of  evidence  the  commissioner  shall  furnish  to  the  district 
attorney,  without  cost  to  the  county,  certified  copies  of  any  papers  or 
records  of  the  office  of  the  commissioner. 

Enacted,  Stats.  1907,  p.  165. 

Old  section  632  is  now  numbered  593. 

Licensing  agents  and  solicitors. 

Sec.  633.  No  person  shall  in  this  state  act  as  the  agent  or  solicitor  of 
any  insurance  company  doing  business  in  this  state  until  he  has  pro- 
duced to  the  commissioner,  and  filed  with  him,  a  duplicate  power  of 
attorney  from  the  company,  or  its  authorized  agent,  authorizing  him  to 
act  as  such  agent  or  solicitor.  Upon  filing  such  power,  the  commissioner 
shall  issue  a  license  to  him  to  act  as  such  agent  or  solicitor  for  such  com- 
pany, if  such  company  has  received  a  certificate  of  authority  from  such 
commissioner  to  do  business  in  this  state.  Such  license  shall  continue  in 
force  until  July  first  after  the  date  thereof,  but  must  be,  and  shall  be, 
sooner  revoked  upon  application  of  the  company  or  its  authorized  agent. 
Such  license  may  be  renewed  from  time  to  time,  for  an  additional  period 
of  twelve  months,  on  production  by  the  holder  to  the  commissioner  of  a 
certificate  from  the  company  that  such  person 's  authority  as  such  agent 
or  solicitor  continues.  The  commissioner  shall  keep  an  alphabetical  list 
of  the  names  of  the  persons  to  whom  such  licenses  shall  be  issued,  with 
the  date  of  the  license  and  renewal,  and  the  name  of  the  company  for 
whom  such  person  is  working. 

Enacted,  Stats.  1873-74,  p.  66.  Amended,  Stats.  1880,  p.  90 ;  1893, 
p.  116.     Repealed  and  present  section  enacted,  Stats.  1907,  p.  165. 

Registration  of  policies  of  life  insurance  companies. 

Sec.  634.  It  shall  be  lawful  for  any  company  or  corporation  transact- 
ing the  business  of  life  insurance  in  this  state  to  register  with  the  insur- 
ance commissioner  such  of  its  policies  as  may  be  agreed  upon  by  the 
company  and  the  insured;  such  registration  to  consist  in  a  written  or 
printed  list  of  such  policies  filed  with  the  commissioner,  showing  the 
name  and  age  of  the  insured,  number  and  date  of  the  policy,  and  the 
kind  and  amount  of  insurance  in  each  case.  Such  list  must  be  filed  with 
the  commissioner  within  thirty  days  after  the  issuance  of  the  first  regis- 
tered policy ;  and  must  contain  all  such  policies  issued  up  to  the  date  of 
filing.  After  that  date  the  company  must,  within  three  days  after  the 
first  day  of  each  calendar  month,  file  a  statement  embracing  all  its  regis- 
tered policies  issued  since  the  filing  of  its  last  preceding  list.  Upon  filing 
such  lists  of  policies,  from  time  to  time,  the  company  must  deposit  with 
the  commissioner,  as  a  special  deposit  for  the  benefit  of  such  registered 
policies,  securities  of  the  denominations  stated  in  section  421  of  the  Civil 
Code  as  permissible  for  the  investment  of  the  capital  and  accumulations 
of  insurance  companies.  Such  deposit  must  be  in  an  amount  equal  to 
the  full  net  value  of  all  policies  registered  up  to  the  time  of  making  the 
deposit,  and  must  at  all  times  be  equal  to  such  net  value  of  all  registered 
policies.  Upon  receipt  of  such  securities,  the  commissioner  must  imme- 
diately deposit  them  in  the  state  treasury,  in  accordance  with  the  provi- 


INSURANCE    COMMISSIONER — SURETIES.  41 

sions  of  section  618  of  the  Political  Code,  where  they  must  remain  as  a 
special  security  for  the  benefit  of  such  registered  policies.  Such  com- 
pany may  at  any  time  withdraw  any  excess  of  securities  above  the  net 
present  value  hereinbefore  specified,  upon  satisfying  said  commissioner 
by  written  proof  that  such  excess  exists,  and  shall  be  allowed  to  receive 
the  interest  on  all  securities  deposited,  and  to  exchange  such  securities 
by  substituting  other  securities  of  the  character  in  which,  by  the  laws  of 
this  state,  it  may  invest  its  funds. 

Enacted,  Stats.  1877-8,  p.  20.  Amended,  Stats.  1905,  p.  151,  Repealed 
and  present  section  enacted.  Stats.  1907,  p.  166. 

See  Harrigan  vs.  Home  Life  Insurance  Company,  128  Col.  540. 

Definitions  and  exceptions. 

Sec.  634a.  The  word  company  as  used  in  this  title  includes  every 
association,  corporation,  firm  or  person  transacting  or  desiring  to  trans- 
act any  kind  of  insurance  business  under  the  laws  of  the  State  of  Cali- 
fornia ;  provided,  that  no  part  of  this  act  shall  be  held  to  apply  to  any 
company  organized  under  an  act  entitled  "An  act  to  provide  for  the 
organization  and  management  of  county  fire  insurance  companies,"  ap- 
proved April  first,  eighteen  hundred  and  ninety-seven,  or  to  any  corpo- 
ration doing  or  transacting  the  business  of  mutual  insurance  on  the 
assessment  plan  as  defined  in  section  453tf  of  the  Civil  Code  of  the  State 
of  California.  The  words  "capital  stock"  as  referred  to  in  this  title 
shall  be  deemed  to  include  the  capital  of  anv  person,  firm  or  association. 

Enacted,  Stats.  1907,  p.  166. 

Demanding  and  recovering  payments  other  than  fees. 

Sec.  634&.  All  fines,  taxes,  assessments,  and  penalties  provided  for  in 
this  title  shall  be  due  and  payable  on  the  demand  of  the  insurance  com- 
missioner. If  the  same  are  not  paid  within  ten  days  after  such  demand 
is  made,  then  the  insurance  commissioner  shall  institute  an  action  in  the 
name  of  the  people  of  the  State  of  California  for  the  purpose  of  recover- 
ing such  fine<,  penalties,  and  taxes,  or  either,  as  the  case  may  be.  All 
such  actions  shall  be  subject  to  all  the  provisions  of  the  Code  of  Civil 
Procedure  which  may  be  applicable  thereto. 

Enacted,  Stats.  1907.  p.  166, 


PART  III.    TITLE  I.     CHAPTER  VII.     ARTICLE  IX. 
BONDS  OF  OFFICERS. 

Sec.  955.     Justification  of  sureties. 

056.     Sureties  for  less  than  the  penal  sum. 

Justification  of  sureties. 

Sec.  955.  The  officer  whose  duty  it  is  to  approve  official  bonds  re- 
quired of  state,  county,  city  and  county,  or  township  officers,  must  not 
accept  or  approve  any  such  bond  unless  each  of  the  sureties  severally 

justify  before  an  officer  authorized  to  administer  oaths  as  follows: 
-j     '*     #     # 

o      *     #     # 

;{  #        #        # 

4.  A  corporation,  such  as  is  mentioned  in  section  1056  of  the  Code  of 
Civil  Procedure  of  this  state,  may  become  and  shall  be  accepted  as  sole 


42  INSURANCE   LAWS   OP    CALIFORNIA. 

and  sufficient  surety  upon  any  bond  or  undertaking  authorized  or  re- 
quired by  the  provisions  of  this  code  or  of  any  law  of  this  state,  subject 
to  the  provisions  of  said  section,  and  those  of  section  1057  of  the  same 
code. 

Enacted  March  12,  1872.     Amended,  Stats.  1873-4,  p.  72 ;  1889,  p.  220. 

County  of  San  Luis  Obispo  vs.  Murphy,  162  Cal.  588,  591. 
Sureties  for  less  than  the  penal  sum. 

Sec.  956.  "When  the  penal  sum  of  any  bond  required  to  be  given, 
amounts  to  more  than  one  thousand  dollars,  the  sureties  may  become  sev- 
erally liable  for  portions  of  not  less  than  five  hundred  dollars  thereof, 
making,  in  the  aggregate,  at  least  two  sureties  for  the  whole  penal  sum. 
And  if  any  such  bond  becomes  forfeited  an  action  may  be  brought 
thereon  against  all  or  any  number  of  the  obligors,  and  judgment 
entered  against  them,  either  jointly  or  severally,  as  they  may  be  liable. 
The  judgment  must  not  be  entered  against  a  surety  severally  bound  for 
a  greater  sum  than  that  for  which  he  is  specially  liable  by  the  terms  of 
the  bond.  Each  surety  is  liable  to  contribution  to  his  co-sureties  in  pro- 
portion to  the  amount  for  which  he  is  liable.  Any  corporation,  such  as 
is  mentioned  in  section  955  of  this  code,  may  become  one  of  such  sureties. 
or  be  accepted  as  sole  and  sufficient  surety. 

Enacted  March  12,  1872.     Amended,  Stats.  1889,  p.  220. 


TITLE  VI.     CHAPTER  I.     ARTICLE  VIII. 

PORT  WARDENS. 

Sec.  2507.     Sales  of  wrecks,  etc.,  and  merchandise  for  foreign  underwriters, 

2508.  Notice  of  sale,  how  given. 

2509.  Wardens  not  to  be  connected  with  insurance. 

Sales  of  wrecks,  etc.,  and  merchandise  for  foreign  underwriters. 

Sec.  2507.  All  wrecked  or  damaged  vessels,  or  materials  from  the 
same,  and  all  merchandise  sold  at  public  auction  for  account  of  under- 
writers residing  abroad,  when  required  by  any  party  having  an  interest 
in  the  same,  or  for  account  of  whom  it  may  concern,  or  upon  which 
claims  are  to  be  made  against  underwriters  residing  abroad,  must  be  sold 
under  the  inspection  of  a  warden  of  the  port  wThere  such  sale  is  made. 
And  the  warden  must  separate  sound  goods  from  those  damaged  and 
certify  specially  the  nature,  and,  as  far  as  can  be  done,  the  extent  of  such 
damage.  No  port  warden  has  authority  to  sell  or  dispose  of  any  prop- 
erty that  may  have  been  surveyed  by  him  without  the  consent  of  the 
owner  or  agent  of  the  same;  nor  when  the  settlement  of  losses  has  been 
agreed  upon  in  wrriting  by  the  parties  interested  and  a  copy  thereof 
given  to  the  warden. 

Enacted  March  12,  1872. 

Notice  of  sale,  how  given. 

Sec.  2508.  In  case  sales  are  made  at  auction  under  the  direction  of 
the  port  warden,  he  must  give  at  least  three  days'  notice  of  the  same  by 
publication  in  some  newspaper  published  in  the  county  where  the  survey 
is  made,  describing  the  articles  to  be  sold;  and  if  merchandise,  the  vessel 
by  which  imported  ;  and  if  a  wrecked  or  damaged  vessel  or  materials  of 


INSURANCE    COMMISSIONER PORT    WARDENS.  43 

the  same,  the  name  of  the  vessel  and  where  from.     If  no  newspaper  is 
published  in  the  place  where  the  sale  is  made,  then  a  written  notice  of 
such  sale  must  be  posted  up  in  the  vicinity. 
Enacted  March  12,  1872. 

Wardens  not  to  be  connected  with  insurance. 

Sec.  2509.  No  port  warden  must,  either  directly  or  indirectly,  have 
any  connection  with  insurers  of  this  state,  or  of  any  other  of  the  states, 
or  of  foreign  countries,  or  with  the  agents  or  representatives  of  such  in- 
surers, so  far  as  his  duties  as  port  warden  are  concerned.  He  must  not 
in  any  manner  be  interested,  directly  or  indirectly,  in  any  repairs  he 
may  recommend,  nor  in  any  vessel,. cargo,  or  portion  of  cargo  he  may  be 
required  to  survey. 

Enacted  March  12,  1872. 


44  INSURANCE    LAWS   OF    CALIFORNIA. 


CIVIL  CODE. 


DIVISION   I.     TART  IV.     TITLE   I.     CHAPTER   II.     ARTICLE   II. 

ASSESSMENTS  OF  STOCK. 

Sec.  331.     Directors  may  levy  assessments. 
332.     Limitation. 

Directors  may  levy  assessments. 

Sec.  331.  The  directors  of  any  corporation  formed  or  existing  under 
the  laws  of  this  state,  after  one  fourth  of  its  capital  stock  has  been  sub- 
scribed, may,  for  the  purpose  of  paying  expenses,  conducting  business, 
or  paying  debts,  levy  and  collect  assessments  upon  the  subscribed  capital 
stock  thereof,  in  the  manner  and  form,  and  to  the  extent  provided  herein. 

Enacted  March  21,  1872.     Amended,  Stats.  1873-74,  p.  206. 

Limitation. 

Sec.  332.     No  one  assessment  must  exceed  ten  per  cent  of  the  amount 

of  the  capital  stock  named  in  the  articles  of  incorporation,  except  in  the 

cases  in  this  section  otherwise  provided  for,  as  follows: 
2      *     *     * 

2      *     *     * 

3.  The  directors  of  fire  or  marine  insurance  corporations  may  assess 

such  a  percentage  of  the  capital  stock  as  they  deem  proper. 

Enacted  March  21,  1872. 

TITLE  II. 

INSURANCE  CORPORATIONS. 

Chapter  I.     General  Provisions.     Sees.  414-422. 

II.     Fire,  Marine,  and  Title  Insurance  Corporations.     Sec.  424-432. 
III.     Mutual    Life,    Health,    and    Accident    Insurance    Corporations.      Sees.- 

437-452. 
IV.     Mutual  Benefit  and  Life  Associations.     Sees.  452a,  453. 
V.     Corporations   to  Discover  Fire  and   Save   Property   and   Human   Life 

from  Destruction  Thereby.     Sees.  453«-453c. 
VI.     Life,  Health,  Accident,  and  Annuity  or  Endowment  Insurance  on  Ihe 
Assessment  Plan.     Sees.  453rf-453p. 


CHAPTER  I. 

GENERAL  PROVISIONS. 

"Sec.  414.  Subscriptions  to  capital  stock  opened,  and  how  collected. 

415.  Purchase  and  conveyance  of  real  estate. 

41<>.  Policies,  how  issued  and  by  whom  signed. 

417.  Dividends,  of  what,  and  when  declared. 

418.  Directors  liable  for  loss  on  insurance  in  certain  cases. 

421.  How  capital  and  accumulations  may  be  invested. 

422.  Reports  on  stocks  and  bonds  held  by  insurance  companies. 

Subscriptions  to  capital  stock  opened  and  how  collected. 

Sec.  414.  After  the  secretary  of  state  issues  the  certificate  of  incorpo- 
ration, as  provided  in  article  one,  chapter  one,  title  one,  of  this  part,  the 
directors  named  in  the  articles  of  incorporation  must  proceed  in  the  man- 


INSURANCE   CORPORATIONS — GENERAL   PROVISIONS.  45 

ner  specified,  or  in  their  by-laws,  or  if  none,  then  in  such  manner  as  they 
may  by  order  adopt,  to  open  books  of  subscription  to  the  capital  stock 
then  unsubscribed,  and  to  secure  subscriptions  to  the  full  amount  of  the 
fixed  capital;  to  levy  assessments  and  installments  thereon,  and  to  collect 
the  same,  as  in  chapter  two  of  title  one  provided. 
Enacted  March  21,  1872. 

Purchase  and  conveyance  of  real  estate. 

Sec.  415.  No  insurance  corporation  may  purchase,  hold  or  convey 
real  estate,  except  as  hereinafter  set  forth,  to  wit : 

1.  The  building  in  which  it  has  its  principal  office  and  the  land  upon 
which  it  stands. 

2.  Also,  such  as  may  be  requisite  for  its  accommodation  in  the  con- 
venient transaction  of  its  business. 

3.  Also,  such  as  may  be  conveyed  to  it,  or  to  any  person  for  it,  by  way 
of  mortgage,  or  in  trust  or  otherwise,  to  secure  or  provide  for  the  pay- 
ment of  loans  previously  contracted  or  for  moneys  due. 

4.  Also,  such  as  may  be  purchased  at  sales  upon  deeds  of  trust,  or 
judgments  obtained  or  made  for  such  loans  or  debts. 

5.  Also,  such  as  may  be  conveyed  to  it  in  satisfaction  of  debts  pre- 
viously contracted  in  the  course  of  its  dealings. 

All  such  real  estate,  mentioned  in  subdivisions  three,  four  and  five  so 
acquired,  which  is  not  requisite  for  the  accommodation  of  such  corpora- 
lion  in  the  transaction  of  its  business,  must  be  sold  and  disposed  of 
within  five  years  after  such  corporation  acquired  title  to  the  same. 

Enacted  March  21,  1872.     Amended,  Stats.  1905,  p.  21. 

Policies,  how  issued  and  by  whom  signed. 

Sec.  416.  All  policies  made  by  insurance  corporations  must  be  sub- 
scribed by  the  president  or  vice-president,  or  in  case  of  the  death, 
absence,  or  disability  of  those  officers,  by  any  two  of  the  directors,  and 
countersigned  by  the  secretary  of  the  corporation.  All  such  policies  are 
as  binding  and  obligatory  upon  the  corporation  as  if  executed  over  the 
corporate  seal. 

Enacted  March  21,  1872. 

Dividends,  of  what,  and  when  declared. 

Sec.  417.  The  directors  of  every  insurance  corporation,  at  such  times 
;is  their  by-laws  provide,  must  make,  declare,  and  pay  to  the  stockholders 
dividends  of  so  much  of  .the  net  profits  of  the  corporate  business  and 
interest  on  capital  invested  as  to  them  appears  advisable ;  but  the  moneys 
received  and  notes  taken  for  premium  on  risks  which  are  undetermined 
and  outstanding  at  the  time  of  making  the  dividend  must  not  be  treated 
as  profits,  nor  divided,  except  as  provided  in  chapter  two  of  this  title. 

Enacted  March  21,  1872. 

Directors  liable  for  loss  on  insurance  in  certain  cases. 

Sec.  418.  If  any  insurance  corporation  is  under  liabilities  for  losses 
to  an  amount  equal  to  its  capital  stock,  and  the  president  or  directors, 
after  knowing  the  same,  make  any  new  or  further  insurance,  the  estates 
of  ;ill  who  make  such  insurance,  or  assent  thereto,  are  severally  and 
jointly  liable  for  the  amount  of  any  loss  which  takes  place  under  such 
insurance. 

Enacted  March  21,  1872. 


46  INSURANCE   LAWS   OF   CALIFORNIA. 

How  capital  and  accumulations  may  be  invested. 

Sec.  421.  Companies  organized  under  the  laws  of  this  state  for  the 
transaction  of  business  in  any  kind  of  insurance  may  invest  their  capital 
and  accumulations  in  the  following  named  securities : 

1.  In  the  purchase  of,  or  loans  upon  interest-bearing  bonds  of  the 
United  States,  or  those  for  which  the  faith  and  credit  of  the  United 
States  are  pledged  for  the  payment  of  principal  and  interest. 

2.  In  the  purchase  of,  or  loans  upon  interest-bearing  bonds  of  any  of 
the  states  of  the  United  States  not  in  default  for  interest  on  such  bonds, 
including  bonds  of  this  state,  or  those  for  which  the  faith  and  credit  of 
the  State  of  California  are  pledged  for  the  payment  of  principal  and 
interest. 

3.  In  the  purchase  of,  or  loans  upon  interest-bearing  bonds  of  any  of 
the  counties  and  incorporated  cities  and  towns  and  duly  organized  school 
districts  of  any  state  or  territory  of  the  United  States  not  in  default  for 
interest  on  such  bonds. 

4.  In  the  purchase  of,  or  loans  upon  interest-bearing  bonds  of  irriga- 
tion districts  as  provided  or  authorized  by  section  8  of  an  act  entitled 
"An  act  relating  to  bonds  of  irrigation  districts,  provided  under  what 
circumstances  such  bonds  may  be  made  legal  investments  for  the  funds 
of  banks,  banking  associations,  trust  companies,  insurance  companies, 
and  for  the  state  school  funds  and  trust  funds,  and  providing  for  the 
deposit  of  such  bonds  as  security  for  public  moneys,  and  providing  for 
a  commission  for  approving  certain  bonds  of  irrigation  districts,  for  a 
report  thereon,  for  the  filing  of  such  report,  for  a  certificate  of  the  state 
controller,  and  for  the  recording  of  such  bonds  in  the  office  of  the  state 
controller,"  approved  December  18,  1911. 

5.  In  loans  secured  by  mortgage  or  deed  of  trust  upon  unencumbered 
real  estate,  improved  or  unimproved,  or  in  the  purchase  of,  or  loans  upon 
notes  or  bonds  so  secured ;  provided,  that  the  principal  so  loaned,  or  the 
entire  note  or  bond  issue  under  such  mortgage  or  deed  of  trust  shall  not 
exceed  sixty  per  centum  of  the  market  value  of  such  real  estate  with 
improvements  taken  as  security;  and  provided,  further,  in  case  said  loan 
is  made,  or  said  note  or  bond  issue  created  for  a  building  loan  on  real 
estate,  that  at  no  time  shall  the  principal  so  loaned  or  the  entire  note  or 
bond  issue  exceed  sixty  per  centum  of  the  market  value  of  the  real  estate 
and  the  actual  cost  of  the  improvements  thereon  taken  as  security. 

6.  Companies  organized  for  and  engaged  in  the  business  of  fire,  life, 
health,  accident  and  marine  insurance,  may,  after  the  investment  of  two 
hundred  thousand  dollars,  and  companies  duly  formed  or  organized  for 
the  transaction  of  business  in  any  other  kind  of  insurance  except  mort- 
gage insurance  may,  after  the  investment  of  one  hundred  thousand 
dollars,  in  the  manner  provided  in  subdivisions  one,  two,  three,  four  and 
five  of  this  section,  invest  the  balance  of  their  capital  and  any  accumula- 
tions in  the  purchase  of  or  loans  upon  the  stock  of  any  corporation 
(except  mining  companies)  organized  and  carrying  on  business  under 
the  laws  of  the  State  of  California  which  have  at  the  time  of  investment 
a  market  value  of  not  less  than  their  paid  in  value,  and  which  are  rated 
as  first-class  securities,  or  in  interest-bearing  bonds  of  any  corporation  of 
any  state  or  territory  of  the  United  States  not  in  default  for  interest  on 
such  bonds;  provided,  that  a  two-thirds  vote  of  all  the  directors  of  such 


INSURANCE    CORPORATIONS GENERAL   PROVISIONS.  47 

corporation  shall  approve  such  investment.  It  shall  be  the  duty  of  the 
officers  of  such  corporation  to  report  quarterly  during  the  months  of 
January,  April,  July  and  October  of  each  year  to  the  insurance  com- 
missioner a  list  of  such  investments  so  made  by  them,  and  the  insurance 
commissioner  may,  if  such  investment,  or  any  of  them,  seem  injudicious 
to  him,  require  the  sale  of  the  same.  But  no  investment  in  the  securities 
named  in  subdivisions  one,  two,  three,  four  and  five  of  this  section  must 
be  made  in  an  amount  exceeding  the  market  value  of  such  securities,  at 
t  he  date  of  such  investment. 

7.  Life  insurance  companies  may  loan  upon  their  own  policies;  pro- 
vided, that  the  amount  so  loaned  upon  each  policy  shall  not  exceed  the 
reserve  against  said  policy  at  the  time  said  loan  is  made;  provided, 
further,  that  no  policy  loans  whatever  shall  ever  be  used  as  security 
which  may  be  deposited  with  the  insurance  commissioner  under  sec- 
tion 634  of  the  Political  Code;  and  provided,  further,  that  whenever  any 
such  loan  in  any  amount  is  made  on  a  policy  registered  with  the  insur- 
ance commissioner  under  said  section  634  of  the  Political  Code,  such 
registration  shall  be  forthwith  canceled. 

Enacted,  Stats.  1905,  p.  628.  Amended,  St;:ts.  1907,  p.  890.  Amended, 
Stats.  1913,  p.  487. 

Section  427  of  the  Civil  Code,  relating  to  how  f .  nils  may  be  invested,  was  repealed 
in  11)05  and  two  sections,  each  421  of  the  Civil  Code,  were  enacted  in  1905,  one 
approved  March  3d  and  the  other  approved  March  24th.  Of  these  two  the  former  was 
repealled  in  1J)05  and  the  latter  was  amended  in  1907  as  set  forth  above  and  is  now 
the  general  statute  of  California  relating  to  investment  by  insurance  companies  of 
California.  Section  444  of  the  Civil  Code  relating  to  the  investment  of  capital  stock 
liv  mutual  health,  life  and  accident  insurance  corporations  was  repealed  in  1907. 

Fire  insurance  companies  organized  outside  the  State  of  California  are  not 
required,  as  a  condition  precedent  to  conducting  business  in  this  state,  to  exhibit 
securities  named  in  section  421  of  the  Civil  Code  to  the  extent  of  a  $200,000.00  invest- 
ment:  Opinion  of  the  Attorney  General,  April  21,  1909. 

The  purchase  of  a  promissory  note  by  an  insurance  company,  pure  and  simple 
would  be  prohibited  by  the  section,  but  if  such  promissory  note  is  secured  by  interest 
bearing  bonds  such  as  are  specified  in  subdivision  6  of  the  section,  then  the  trans- 
action is  essentially  a  loan  upon  such  bonds  :  Opinion  of  Attorney  for  Insurance  Cotn- 
mitiioner,  September  5,  1918. 

Report  on  stocks  and  bonds  held  by  insurance  companies. 

Sec.  422.  If  any  domestic  insurance  corporation  shall  have  invested 
any  of  its  funds  in  or  loaned  any  of  its  funds  upon  the  stock,  bonds  or 
other  evidences  of  debt  of  other  corporations  or  of  any  nation,  state, 
county,  city,  village,  school  district,  municipality,  or  other  civil  division 
of  any  state,  pursuant  to  the  laws  of  this  state,  and  the  insurance 
commission  shall  have  reason  to  believe  that  such  stock,  bonds  or  other 
evidences  of  debt  are  not  amply  secured  or  are  not  yielding  an  income, 
he  may  direct  it  to  report  to  him  under  oath  the  amount  thereof,  the 
security  therefor  and  its  market  value.  No  stock  and  no  bond  or  other 
evidence  of  debt  if  in  default  as  to  principal  or  interest,  or  if  not  amply 
secured,  shall  be  valued  as  an  asset  of  the  corporation  above  its  market 
value. 

How  valued. 

All  bonds  or  other  evidences  of  debt  held  by  any  insurance  corpora- 
tion authorized  to  do  business  in  this  state,  if  amply  secured  and  if  not 
in  default  as  to  principal  or  interest,  may  in  the  discretion  of  the  insur- 
ance commissioner,  be  valued  as  follows :  If  purchased  at  par,  at  the  par 
value;  if  purchased  above  or  below  par,  on  the  basis  of  the  purchase 


48  INSURANCE   LAWS   OF   CALIFORNIA. 

price  adjusted  so  as  to  bring  the  value  to  par  at  maturity  and  so  as  to 
yield  the  effective  rate  of  interest  at  which  the  purchase  was  made; 
provided,  that  the  purchase  price  shall  in  no  case  be  taken  at  a  higher 
figure  than  the  actual  market  value  at  the  time  of  purchase;  and  pro- 
vided, farther,  that  the  insurance  commissioner  shall  have  full  discretion 
in  determining  the  method  of  calculating  values  according  to  the  fore- 
going rule,  and  the  values  found  by  him  in  accordance  with  such  method 
shall  be  final  and  binding;  provided,  also,  that  any  such  corporation  may 
return  such  bonds  or  other  evidence  of  debt  at  their  market  value  or 
their  book  value,  but  in  no  event  at  an  aggregate  value  exceeding  the 
aggregate  of  the  values  calculated  according  to  the  foregoing  rule. 

Enacted  June  6,  1913. 

State.  1913,  p.  464.     In  effect  August  10,  1913. 


CHAPTER   II. 

FIRE  AND  MARINE  INSURANCE  CORPORATIONS. 

Sec.  424.  Payment  of  subscriptions.     Capital  to  be  all  paid  in  twelve  months, 

4lT».  Certificate  of  capital  stock  paid  up  to  be  filed,  and  when. 

420.  Property  which  may  be  insured. 

428.  Limit  of  one  risk. 

421).  Amounts  to  be  reserved  before  making  dividends. 

430.  Reservations  by  companies  with  less  than  two  hundred  thousand  dollars 
capital. 

Payment  of  subscriptions.     Capital  to  be  all  paid  in  twelve  months. 

Sec.  424.  The  entire  capital  stock  of  every  fire  or  marine  insurance 
corporation  must  be  paid  up  in  cash  within  twelve  months  from  the  fil- 
ing of  the  articles  of  incorporation,  and  no  policy  of  insurance  must  be 
issued  or  risk  taken  until  twenty-five  per  cent  of  the  whole  capital  stock 
is  paid  up. 

Enacted  March  21,  1872. 

There  is  no  good  reason  for  holding  that  a  company  which  has  failed  to  pay  up  its 
entire  capital  stock  within  the  one  year  period  may  not  thereafter,  upon  fully  paying 
up  its  capital  stock  receive  a  license,  particularly  in  view  of  the  fact  that  there  is  no 
provision  of  the  law  that  it  shall  not,  but  merely  the  direction  of  the  law  that  it  must 
pay  up  its  capital  within  one  year:  Opinion  of  the  Attorney  General,  October  2,  1911. 

The  insurance  department  has  no  authority  to  issue  a  certificate  of  authority  to  an 
insurance  company  until  it  has  complied  with  all  the  laws  governing  such  companies. 

The  insurance  department  may  require  such  company  before  issuing  a  certificate  of 
authority  to  reduce  the  amount  of  its  authorized  capital  to  the  amount  shown  by  its 
books  to  have  been  fully  paid  up,  and  may  then  issue  such  certificate. 

Such  company  has  the  right  to  continue  its  stock  selling  until  the  amount  of  its 
capital  is  fully  paid  up,  unless,  before  that,  on  a  suit  of  some  stockholder,  the  state 
shall  have  declared  forfeited  the  right  of  the  company  to  do  business:  Opinion  of 
the  Attorney  General,  October  2,  1911. 

Certificate  of  capital  stock  paid  up  to  be  filed  and  when. 

Sec.  425.  The  president  and  a  majority  of  the  directors  must,  within 
thirty  days  after  the  payment  of  the  twenty-five  per  cent  of  the  capital 
stock,  and  also  within  thirty  days  after  the  payment  of  the  last  install- 
ment or  assessment  of  the  capital  stock  limited  and  fixed,  prepare,  sub- 
scribe, and  swear  to  a  certificate  setting  forth  the  amount  of  the  fixed 
capital  and  the  amount  thereof  paid  up  at  the  times  respectively  in  this 
section  named,  and  file  the  same  in  the  office  of  the  county  clerk  of  the 
county  where  the  principal  place  of  business  of  the  corporation  is 
located,  and  a  duplicate  thereof,  similarly  executed,  with  the  insurance 
commissioner. 

Enacted  March  21,  1872. 


FIRE    AND    MARINE    INSURANCE    CORPORATIONS.  40 

Property  which  may  be  insured. 

Sec.  426.  Every  corporation  formed  for  fire  or  marine  insurance,  or 
both,  may  make  insurance  on  all  insurable  interests  within' the  scope  of 
its  articles  of  incorporation,  and  may  cause  itself  to  be  reinsured. 

Enacted  March  21,  1872. 

Limit  of  one  risk. 

Sec.  428.  Fire  and  marine  insurance  corporations  must  never  take, 
on  any  one  risk,  whether  it  is  a  marine  insurance  or  an  insurance  against 
tire,  a  sum  exceeding  one  tenth  part  of  their  capital  actually  paid  in,  and 
intact  at  the  time  of  taking  such  risk,  without  at  once  reinsuring  the 
excess  above  one  tenth. 

Enacted  March  21,  1872.  Amended,  Stats.  1873-74,  p.  210;  Stats. 
1905,  p.  570. 

Amounts  to  be  reserved  before  making  dividends. 

Sec.  429.  No  corporation  formed  subsequent  to  April  first,  eighteen 
hundred  and  seventy-eight,  under  the  law^  of  this  state,  and  transacting 
fire,  marine  or  inland  navigation  insurance  business,  must  make  any 
dividends  except  from  profits  remaining  on  hand  after  retaining 
unimpaired : 

1.  The  entire  subscribed  capital  stock. 

2.  All  the  premiums  received  or  receivable  on  outstanding  marine  or 
inland  risks,  except  marine  time  risks. 

3.  A  fund  equal  to  one  half  of  the  amount  of  all  premiums  on  all 
other  risks  not  terminated  at  the  time  of  making  such  dividend. 

4.  A  sum  sufficient  to  pay  all  losses  reported  or  in  course  of  settle- 
ment, and  all  liabilities  for  expenses  and  taxes. 

Enacted  March  21,  1872.  Amended,  Stats.  1877-78,  p.  81 ;  Stats.  1887, 
p.  23.     Amended,  Stats.  1913,  p.  489. 

Sun  Insurance  Co.  vs.  White,  123  Cal.  196,  203.     (Referred  to  Sec.  429.) 
Reservation  by  companies  with  less  than  two  hundred  thousand  dollars  capital. 

Sec.  430.  No  fire  or  marine  insurance  corporation,  with  a  subscribed 
capital  of  less  than  two  hundred  thousand  dollars,  must  declare  any 
dividends,  except  from  profits  remaining  on  hand  after  reserving: 

1.  A  sum  necessary  to  form,  with  the  subscribed  capital  stock,  the 
aggregate  sum  of  two  hundred  thousand  dollars ; 

2.  All  the  premiums  received  or  receivable  on  outstanding  marine  or 
inland  risks,  except  marine  time  risks ; 

3.  A  fund  equal  to  one  half  the  amount  of  all  premiums  on  fire  risks 
and  marine  time  risks  not  terminated  at  the  time  of  making  such  divi- 
dend ; 

4.  A  sum  sufficient  to  pay  all  losses  reported  or  in  course  of  settle- 
ment,  and  all  liabilities  for  expenses  and  taxes. 

Enacted  March  21,  1872. 


4— ii. 


50  INSURANCE   LAWS   OP    CALIFORNIA. 


CHAPTER  III. 

MUTUAL  LIFE,  HEALTH,  AND  ACCIDENT  INSURANCE 
CORPORATIONS. 

Sec.  437.  Capital  stock.     Guarantee  fund. 

438.  Of  what  guarantee  fund  shall  consist. 

489.  What  constitutes,  and  deficiency  in  fixed  capital. 

440.  Declaration  of  fixed  capital  to  be  filed. 

441.  Guarantee  notes  and  interest,  how  disposed  of. 

442.  Insured  to  be  entitled  to  vote,  when. 

148.     Number  of  directors  may  be  altered,  how. 
445.     Limitations   to  the  holding  of  stock,   and   in   other  particulars,    may   be 

provided  for  in  by4aws. 
44(5.     Premiums,  how  payable. 
450.     Policy  to  contain  what  provisions. 
4.~»2.     Dividends,  how  made. 

Capital  stock.     Guarantee  fund. 

Sec.  437.  Every  corporation  formed  for  the  purpose  of  mutual  insur- 
ance on  the  lives  or  health  of  persons,  or  against  accidents  to  persons  for 
life  or  any  fixed  period  of  time,  or  to  purchase  and  sell  annuities,  must 
have  a  capital  stock  of  not  less  than  two  hundred  thousand  dollars.  It 
must  not  make  any  insurance  upon  any  risk  or  transact  any  other  busi- 
ness as  a  corporation  until  its  capital  stock  is  fully  paid  up  in  cash,  nor 
until  it  has  alo  obtained  a  fund,  to  be  known  as  a  "Guarantee  Fund," 
of  not  less  than  two  hundred  and  fifty  thousand  dollars,  as  is  hereinafter 
provided.  If  more  than  the  requisite  amount  is  subscribed,  the  stock 
must  be  distributed  pro  rata  among  the  subscribers.  Any  subscription 
may  be  rejected  by  the  board  of  directors  or  the  committee  thereof,  either 
as  to  the  whole  or  any  part  thereof,  and  must  be,  so  far  as  rejected,  with- 
out effect;  nothing  in  this  section  shall  be  deemed  to  contravene  any  of 
the  provisions  of  section  451. 

Enacted  March  21,  1872.     Amended,  Stats.  1905,  p.  183. 

The  so-called  Home  Benefit  Life  Association  failed  to  organize  in  accordance  with 
section  437,  and  after  doing  business  for  many  years,  an  action  was  brought  against 
the  officers  for  a  large  sum  of  money  paid  in  by  plaintiff  and  his  assignors,  many  in 
number,  upon  the  theory  that  the  association  was  never  legally  incorporated,  and  that 
the  defendants  acted  without  statutory  authority. 

The  evidence  showed  that  the  business  had  been  honestly  administered,  that  the 
moneys  received  had  been  paid  out  in  accordance  with  the  by-laws  which  were 
printed  on  the  back  of  each  certificate  received  by  the  plaintiff  and  his  assignors, 
that  there  was  no  fraud,  that  all  made  substantially  the  same  mistake  in  supposing 
the  association  to  have  been  properly  incorporated,  and  that  under  such  circumstances 
the  parties  were  estopped  to  recover  back  payments  thus  voluntarily  made.  (Perkins 
vs.  Fish  et  al..  121  Cal.  317.) 

Of  what  guarantee  fund  shall  consist. 

Sec.  438.  The  guarantee  fund  mentioned  in  the  preceding  section 
must  consist  of  the  promissory  notes  of  solvent  parties,  approved  by  the 
board  of  directors  and  by  each  other,  payable  to  the  corporation  or  its 
order,  and  at  such  times,  in  such  modes,  and  in  such  sums,  with  or  with- 
out interest,  and  conformable  in  all  other  respects  to  such  requirements 
as  the  board  of  directors  prescribe ;  but  the  amount  of  the  notes  given  by 
any  one  person  must  not  exceed  in  the  whole  the  sum  of  five  thousand 
dollars,  exclusive  of  interest.  Such  notes  must  be  payable  absolutely 
and  at  the  option  of  the  corporation ;  they  must  be  negotiable,  and  may 
be  indorsed  and  transferred,  or  converted  into  cash,  or  otherwise  dealt 
with  by  the  corporation,  at  its  discretion,  without  reference  to  any  con- 


Ml  "ITAL    LIFE,    HEALTH,    AND    ACCIDENT    INSURANCE.  51 

tingency  of  losses  or  expenses.  Such  notes,  or  the  proceeds  thereof,  must 
remain  with  the  corporation  as  a  fund  for  the  better  security  of  persons 
dealing  with  it,  and  constitute  the  assets  of  the  corporation,  liable  for  all 
its  debts,  obligations,  and  indebtedness,  next  after  its  assets  from  pre- 
miums and  other  sources,  exclusive  of  capital  stock,  until  the  net  earn- 
ings over  and  above  its  expenses,  losses  and  liabilities  shall  have  accumu- 
lated in  cash,  or  securities  in  which  the  net  earnings  have  been  invested, 
to  a  sum  which,  with  the  capital  stock,  is  equal  to  the  aggregate  of  the 
original  amounts  of  the  guarantee  fund  and  of  the  capital  stock. 
Enacted  March  21,  1872. 

Merchants  Trust  Co.  vs.  Bcntel,  10  Cal.  App.  75,  77.  Held,  not  applicable  to 
Sec.  438. 

What  constitutes,  and  deficiency  in  fixed  capital. 

SBC.  489.  The  sum  accumulated,  as  provided  in  the  preceding  sec- 
tion, together  with  the  capital  stock,  shall  become  and  remain  the  fixed 
capital  of  the  corporation,  not  subject  to  division  among  the  stockholders 
or  parties  dealing  with  it,  or  to  be  expended  in  any  manner  otherwise 
than  may  be  required  in  payment  of  the  corporation's  debts  and  actual 
expenses,  until  the  business  of  the  corporation  is  closed,  its  debts  paid, 
and  its  outstanding  policies  and  obligations  of  every  kind  canceled  or 
provided  for;  and  if  from  any  cause  a  deficiency  at  any  time  occurs  in 
such  tixed  capital,  no  further  division  of  profits  must  take  place  until 
such  deficiency  has  been  made  up. 

Enacted  March  21,  1872. 

Declaration  of  fixed  capital  to  be  filed. 

Sac.  440.  Whenever  the  fixed  capital  of  the  corporation  is  obtained 
as  hereinbefore  provided,  the  president  of  the  corporation  and  its  act- 
uary, or  its  secretary  if  there  is  no  actuary,  must  make  a  declaration  in 
writing,  sworn  to  before  some  notary  public,  of  the  amount  of  such  fixed 
capital,  and  of  the  particular  kinds  of  property  composing  the  same, 
with  the  nature  and  amount  of  each  kind,  which  must  be  filed  with  the 
original  articles  of  incorporate  n.  and  a  copy,  certified  by  the  county 
clerk,  must  be  published  for  at  least  four  successive  weeks  in  a  news- 
pa  per  published  in  the  county  where  the  principal  business  of  the  corpo- 
ration is  situated.  Upon  the  filing  of  such  declaration  the  guarantee 
fund  is  discharged  of  its  obligations,  and  all  notes  of  the  fund  remain- 
ing in  the  control  of  the  corporation,  and  not  affected  by  any  lien 
thereon,  or  claim  of  that  nature,  must  be  surrendered  by  it  to  the  makers 
1  hereof  respectively,  or  other  parties  entitled  to  receive  the  same. 

Enacted  March  21,  1872. 

Guarantee  notes  and  interest,  how  disposed  of. 

Sec.  441.  Until  the  guarantee  fund  is  discharged  from  its  obliga- 
tions, as  provided  in  the  preceding  section,  no  note  must  be  withdrawn 
from  the  fund  unless  another  note  of  equal  solvency  is  substituted  there- 
for, with  the  approval  of  the  board  of  directors.  The  corporation  must 
allow  a  com  mission,  not  exceeding  five  per  cent  per  annum,  on  all  such 
guarantee  notes  while  outstanding,  and  also  interest  on  all  moneys  paid 
<>n  such  notes  by  the  parties  liable  thereon,  at  the  rate  of  twelve  per 
cent  per  annum,  payable  half  yearly,  until  repaid  by  the  corporation, 
unless  the  current  rate  of  interest  is  different  from  this  amount,  in  which 


52  INSURANCE  LAWS  OP   CALIFORNIA. 

case  the  rate  payable  may,  from  time  to  time,  at  intervals  of  not  less  than 
one  year,  be  increased  or  reduced  by  the  board  of  directors,  so  as  to  con- 
form to  the  current  rate. 

Enacted  March  21,  1872.  .  Amended,  Stats.  1873-4,  p.  210. 

Insured  to  be  entitled  to  vote,  when. 

Sec.  442.  After  the  filing  of  the  declaration  of  the  fixed  capital,  as  in 
this  article  provided,  the  holders  of  policies  of  life  insurance  for  the  term 
of  life,  on  which  the  premiums  are  not  in  default,  may  vote  at  the  elec- 
tion of  directors,  and  have  one  vote  for  each  one  thousand  dollars  insured 
bv  their  policies,  respectivelv. 
'  Enacted  March  21,  1872. 

Number  of  directors  may  be  altered,  how. 

Sec.  443.  The  number  of  directors  specified  in  the  articles  of  incor- 
poration may  be  altered  from  time  to  time  during  the  existence  of  the 
corporation  by  resolution,  at  the  annual  meeting  of  a  majority  of  those 
entitled  to  vote  at  the  election  of  directors,  but  the  number  must  never 
be  reduced  below  five. 

Enacted  March  21,  1872. 

Limitations  to  the  holding  of  stock  and  in  other  particulars,  may  be  provided 
for  in  by-laws. 

Sec.  445.  The  corporation  may,  by  its  by-laws,  limit  the  number  of 
shares  which  may  be  held  by  any  one  person,  and  make  such  other  provi- 
sions for  the  protection  of  the  stockholders  and  the  better  security  of 
those  dealing  with  it  as  to  a  majority  of  the  stockholders  may  seem 
proper,  not  inconsistent  with  the  provisions  of  this  title  or  part. 

Enacted  March  21,  1872. 

Premiums,  how  payable. 

Sec.  446.  All  premiums  must  be  payable  wholly  in  cash,  or  one  half 
or  a  greater  proportion  in  cash,  and  the  remainder  in  promissory  notes 
bearing  interest,  as  may  be  provided  for  by  the  by-laws.  Agreements 
and  policies  of  insurance  made  by  the  corporation  may  be  upon  the  luisis 
of  full  or  partial  participation  in  the  profits,  or  without  any  participa- 
tion therein,  as  may  be  provided  by  the  by-laws  and  agreed  between  the 
parties. 

Enacted  March  21,  1872. 

Policy  to  contain  what  provisions. 

Sec.  450.  Every  contract  or  policy  of  life  insurance  hereinafter  made 
by  any  person  or  corporation,  with  and  upon  the  life  of  a  resident  of  this 
state,  and  delivered  within  this  state,  shall  provide,  in  event  of  default 
of  any  premium  payment  after  three  full  annual  premiums  shall  have 
been  paid  on  such  policy,  that  without  any  action  on  the  part  of  the  in- 
sured, the  net  value  of  such  policy  based  upon  the  reserve  basis  used  in 
computing  the  premiums  and  values  thereunder  (the  policy  to  specify 
the  mortality  table  and  rate  of  interest  so  adopted)  which  net  value  shall 
be  at  least  equal  to  its  entire  net  reserve  at  the  date  of  default,  including 
that  of  dividend  additions,  if  any,  based  upon  a  standard  not  lower  than 
the  American  Experience  Tables  of  Mortality  with  interest  at  three  and 
one  half  per  cent  yearly,  less  a  surrender  charge  of  not  more  than  two 
and  one  half  per  cent  of  the  face  amount  of  the  policy  and  of  any  exist- 


MUTUAL   LIFE,    HEALTH.    AND   ACCIDENT   INSURANCE.  58 

ing  dividend  additions  thereto  and  less  any  indebtedness  to  the  company 
on  or  secured  by  the  policy,  shall  be  applied  as  a  single  premium  to  the 
purchase  of  one  of  the  following  stipulated  forms  of  insurance : 

First — Paid-up  non-participating  term  insurance  in  the  amount  of  the 
face  of  the  policy,  plus  dividend  additions,  if  any,  for  such  a  period  as 
the  net  value  outlined  above  will. purchase  at  the  net  single  premium,  at 
the  attained  age  of  the  insured  at  the  time  of  the  lapse,  based  upon  the 
reserve  basis  described  in  the  policy;  provided,  however,  that  under  en- 
dowment contracts  the  term  shall  not  extend  beyond  the  endowment 
period  named  in  the  original  contract,  and  the  excess  value,  if  any,  shall 
be  applied  as  a  net  single  premium  to  purchase  in  the  same  manner 
paid-up  pure  endowment  insurance,  payable  at  the  end  of  the  endow- 
ment period  named  in  the  contract  if  the  insured  be  then  living;  or, 

Second — Paid-up  non-participating  term  insurance  in  the  amount  of 
the  face  of  the  policy,  plus  dividend  additions,  if  any,  and  less  any  out- 
standing indebtedness,  for  such  a  period  as  the  net  value  outlined  above 
will  purchase  at  the  net  single  premium,  at  the  attained  age  of  the 
insured,  based  upon  the  reserve  basis  described  in  the  policy ;  provided, 
hoWi  vi  r,  that  under  endowment  contracts  the  term  shall  not  extend  be- 
yond the  endowment  period  named  in  the  original  contract,  and  the 
excess  value,  if  any,  shall  be  applied  as  a  net  single  premium  to  purchase 
in  the  same  manner  paid-up  pure  endowment  insurance,  payable  at  the 
end  of  the  endowment  period  named  in  the  contract  if  the  insured  be 
then  living;  or, 

Third — Paid-up  non-participating  insurance  payable  at  the  time  and 
on  the  conditions  named  in  the  policy  for  such  an  amount  as  the  net 
value  outlined  above  will  purchase  at  the  net  single  premium,  at  the 
attained  age  of  the  insured,  based  upon  the  reserve  basis  described  in 
the  policy;  provi<h  <l,  Kowt  Vi  r,  that  the  policy  may  be  surrendered  to  the 
company,  at  its  home  office,  upon  due  application  by  the  legal  owner 
thereof,  within  one  month  after  date  of  premium  default,  for  a  specified 
cash  value  which  shall  be  at  least  equal  to  the  sum  which  would  be  other- 
wise available  for  the  purchase  of  the  automatic  form  of  insurance  pro- 
vided therein ;  and  provided  further,  that  the  company  may  defer  pay- 
ment of  such  cash  value  for  not  more  than  six  months  after  application 
therefor  is  made.  No  agreement  between  the  company  and  the  policy- 
holder or  applicant  for  insurance  contrary  to  the  foregoing  shall  be  held 
to  waive  any  of  the  provisions  provided  above.  Any  life  insurance 
policy  issued  upon  the  life  of  a  resident  of  this  state,  and  delivered  within 
this  state,  which  does  not  contain  an  automatic  non-forfeiture  value  in 
conformity  with  the  foregoing  shall  be  construed  as  granting  non- 
participating  term  insurance,  as  provided  in  paragraph  first  of  this 
section,  and  such  a  benefit  shall  be  read  into  the  contract.  The  provi- 
sions of  this  section  shall  not  apply  to  annuities,  industrial  policies  or  to 
term  contracts  issued  for  periods  of  twenty  years  or  less. 

Skc.  2.  All  acts  and  parts  of  acts  in  conflict  with  this  act  are  hereby 
repealed. 

Enacted,  Stats.  1873-4,  p.  271.  Amended,  Stats.  1877-8,  p.  82;  1880, 
|>.  01  ;  1911,  p.  1272. 

A  policy  of  insurance  was  issued  of  (he  character  known  as  the  ordinary  life  divi- 
dend insurance  policy.  After  the  premiums  had  been  paid  for  several  years,  a  default 
occurred  and  the  policy  was  surrendered  to  the  company  for  a  cash  consideration. 
Within  eighteen  months  after  the  surrender  the  party,  upon  whose  life  the  insurance 


54  INSURANCE   LAWS   OF    CALIFORNIA. 

was  brought,  died,  and  an  action  was  brought  against  the  company  based  upon  its 
alleged  fraud  and  deceit  in  procuring  the  surrender  of  the  policy.  It  was  contended 
that  the  stipulation  mentioned  in  section  450,  to  the  effect  that  after  payment  of 
three  full  annual  premiums  a  policy  should  cease  to  become  void  solely  by  reason  of 
non-payment,  etc.,  should  be  read  into  and  considered  a  part  of  the  policy,  as  if  it 
had  been  actually  inserted  therein.  The  court  was  of  the  opinion,  however,  that  this 
contention  was  not  tenable,  because  in  providing  severe  penalties  for  the  omission 
to  insert  the  stipulation  mentioned  the  legislature  recognized  the  fact  that  it  might 
be  left  out  of  any  policy  in  which  event  the  violation  of  the  section  was  a  matter 
between  the  company  and  the  state,  which  could  not  affect  the  terms  of  the  policy. 
(Straube  vs.  Pacific  M.  L.  Ins.  Co.,  123  Cal.  077.) 

This  construction  of  the  section  was  affirmed  in  Rife  vs.  Union  Central  Life  Co., 
129  Cal.  455. 

See  Nielsen  vs.  Provident  Savings  Life  In*.  Society  of  \.  Y„  130  Cal.  332.  con- 
struing New  York  statute,  similar  in  many  respects  to  section  450  of  our  Civil  Code. 

Dividends,  how  made. 

Sec.  452.  No  corporation  formed  under  the  laws  of  this  state,  and 
transacting  life  insurance  business,  must  make  any  dividends,  except 
from  profits  remaining  on  hand  after  retaining  unimpaired : 

(1)  The  entire  capital  stock ; 

(2)  A  sum  sufficient  to  pay  all  losses  reported  or  in  course  of  settle- 
ment, and  all  liabilities  for  expenses  and  taxes; 

(3)  A  sum  sufficient  to  reinsure  all  outstanding  policies,  as  ascer- 
tained and  determined  upon  the  basis  of  the  American  Experience  Trildr 
of  Mortality,  and  interest  at  the  rate  of  four  and  one  half  per  cent  per 
annum. 

Enacted,  Stats.  1877-8,  p.  83.  Repealed,  Stats.  1880,  p.  72.  Added, 
Stats.  1905,  p.  57] . 


CHAPTER  IV. 

MUTUAL  BENEFIT  AND  LIFE  ASSOCIATIONS. 

Sec.  452ff.  Formation  of  the  association. 

453.     Levying  of  assessments.     By-laws  which  may  be  made. 

Formation  of  the  benefit  association. 

Sec.  452a.  Associations  of  any  number  of  persons  may  be  formed 
for  the  purpose  of  paying  the  nominee  of  any  member  a  sum,  upon  the 
death  of  the  member,  not  exceeding  three  dollars  for  each  member  of 
the  association,  but  not  exceeding,  in  any  case,  the  sum  of  three  thousand 
dollars.  Such  association  may  be  formed  by  filing  articles  of  incorpora- 
tion in  the  office  of  the  clerk  of  the  county  in  which  the  principal  place 
of  business  is  situated  and  a  certified  copy  of  such  articles  of  incorpora- 
tion, duly  certified  by  the  county  clerk,  in  the  office  of  the  secretary  of 
state.  Such  articles  must  state  the  name  of  the  corporation,  its  general 
purposes,  its  principal  place  of  business,  its  term  of  existence,  not  ex- 
ceeding fifty  years  and  the  names  and  residences  of  the  directors  selected 
or  appointed  to  serve  for  the  first  year.  The  articles  of  incorporation 
must  be  signed  by  not  less  than  twenty-five  members  of  such  association 
and  must  be  acknowledged  by  them  as  required  by  section  two  hundred 
and  ninety-two. 

Enacted,  Stats.  1905,  p.  411.     Amended,  Stats.  1913,  p.  12. 

Levying  of  assessments.     By-laws  which  may  be  made. 

Sec.  453.  Each  association  provided  for  in  this  chapter  may,  on  the 
death  of  a  member,  lew  an  assessment  on  the  surviving  members  of  not 


CORPORATIONS    TO    SAVE    PROPERTY    AND    HUMAN    LIFE.  55 

exceeding  three  dollars  for  each  member,  and  collect  and  pay  the  same 
to  the  nominee  of  such  decedent,  and  may  also  provide  for  the  payment 
of  such  annual  payments  by  members  as  may  be  deemed  just,  but  no 
member  must  be  subject  to  any  annual  assessment  in  excess  of  that  estab- 
lished when  he  joined  the  association.  The  association  may  make  such 
by-laws  not  inconsistent  with  the  laws  of  the  state  as  may  be  necessary 
for  its  government  and  the  transaction  of  its  business;  may,  by  its  name, 
sue  and  be  sued ;  loan  such  funds  as  it  may  have  on  hand ;  and  own  suffi- 
cient real  (state  for  its  business  purposes  and  such  as  it  may  be  neces- 
sary to  purchase  od  foreclosure  of  its  mortgages. 
Enacted,  Stats.  1905.  p.  411. 

The  statute  of  1873-4,  page  745,  as  amended  by  the  statutes  of  1880,  page  250, 
and  1901,  page  6,  relating  to  Mutual  Benefit  Associations,  is  codified  in  the  above 
sections  of  the  Civil  Code  (452a,  453). 


CHAPTER  V. 

CORPORATIONS  TO  DISCOVER  FIRE  AND  SAVE  PROPERTY 
AND  HUMAN  LIFE  FROM  DESTRUCTION  THEREBY. 

Sec.  45;!,'/.  Powers  of  the  corporation. 

A^'Mt.  flight  of  way  of  corporation  and  its  officers  when  running  to  fires. 
153c.    Yearly  meeting  of  corporation,  notice  to  be  given  thereof,  and  proceedings 
which  may  be  authorized  thereat. 

Powers  of  the  corporation. 

Sec.  453a.  Any  corporation  of  underwriters  heretofore  organized 
and  now  existing,  or  which  may  be  hereafter  organized  under  the  laws  of 
this;  state,  for  the  purpose  of  discovering  and  preventing  fires  and  of 
saving  property  and  human  life  from  conflagration,  and  doing  business 
within  any  municipal  corporation  of  this  state,  has  power,  at  its  own 
proper  cost  and  expense,  to  maintain  a  corps  of  men,  with  proper  officers, 
equipped  with  the  accessary  machinery  and  apparatus  therefor,  whose 
duly  it  is.  so  far  as  practicable,  to  discover  and  prevent  tires  and  save 
pr<  perty  and  human  life  from  conflagration;  and  for  the  effective  dis- 
cha  pge  of  such  duties,  authority  is  hereby  granted  such  corps  to  enter  any 
building  on  fire,  or  in  which  property  is  on  fire,  or  which  such  corps  or 
any  officer  1  hereof  deems  to  be  immediately  exposed  to  any  existing  fire, 
or  iu  danger  of  taking  fire  from  a  burning  building,  and  to  remove  or 
otherwise  save  and  protect  from  conflagration  or  damage  by  water  any 
property,  during  and  immediately  after  such  fire.  Nothing  in  this 
chapter  must  be  so  construed  as  in  any  degree  to  lessen,  impair,  or  inter- 
fere with  the  powers,  privileges,  duties  or  authority  of  the  regular  fire 
department  of  such  municipality;  nor  can  any  act  of  such  corps  justify 
any  owner  of  any  building  or  property  in  abandoning  such  building  or 
property. 

Enacted,  Stats.  1905.  p.  571. 

Right  of  way  of  corporations  and  its  officers  when  running  to  fires. 

Sec.  4536.  Such  corporation,  with  its  officers  and  corps,  when  run- 
ning to  a  fire  with  its  horses,  vehicles,  and  salvage  apparatus,  has  the 
same  right  of  way  as  is  or  may  be  bestowed  by  any  ordinance  of  the 
municipality  or  law  of  this  state  upon  the  regular  fire  department  of  the 
municipality  wherein  such  corporation  is  acting;  but  the  rights  of  such 


56  INSURANCE    LAWS   OF    CALIFORNIA. 

fire  department  must  always  be  paramount  to  the  rights  of  such  corpora- 
tion. All  ordinances  now  existing  or  which  may  hereafter  be  passed  by 
the  municipal  authorities  of  any  city  and  county,  or  of  any  incorporated 
city  or  town  wherein  such  a  corporation  may  carry  on  business,  and  all 
laws  of  this  state  applicable  to  such  city  and  county,  or  city  or  town,  for 
the  conviction  or  punishment  of  any  person  or  persons  wilfully  or  care- 
lessly obstructing  the  progress  of  the  apparatus  of  the  fire  department  of 
such  city  and  county,  or  city  or  town,  while  going  to  a  fire,  or  of  any 
person  or  persons  wilfully  or  carelessly  injuring  any  animal  or  property 
of  said  fire  department,  are  equally  applicable  to  any  person  or  persons 
wilfully  or  carelessly  obstructing  the  progress  of  the  apparatus  of  such 
corporation  while  going  to  a  fire,  and  to  any  person  or  persons  who 
wilfully  or  carelessly  injures  any  animal  or  property  of  such  corpo- 
ration; and  said  laws  and  ordinances,  and  their  penalties,  may  be 
enforced  in  the  same  courts  and  in  the  same  manner,  and  with  equal 
force  and  effect,  as  in  the  case  of  the  fire  department. 
Enacted,  Stats.  1905,  p.  572. 

Yearly  meeting  of  corporation,  notice  to  be  given  thereof,  and  proceedings 
which  may  be  authorized  thereat. 

Sec.  453c.  In  the  month  of  July,  in  every  year,  there  must  be  held  a 
meeting  of  all  corporations  created  for  the  purposes  specified  in  this 
chapter,  of  which  ten  days'  previous  notice  must  be  inserted  in  at  least 
one  daily  newspaper  published  in  the  municipality  where  said  corpora- 
tion is  organized  or  established,  at  which  meeting  each  insurance  com- 
pany, corporation,  association,  underwriter,  agent,  person,  or  persons 
doing  a  fire  insurance  business  in  said  municipality,  whether  members  of 
said  corporation  or  not,  shall  have  a  right  to  be  represented,  and  shall  be 
entitled  to  one  vote.  A  majority  of  the  whole  number  so  represented  lias 
power  to  decide  upon  the  question  of  sustaining  the  fire  patrol  organized 
by  corporations  heretofore  created,  or  that  may  be  hereafter  created,  and 
fixing  the  maximum  amount  of  expenses  which  may  be  incurred  there- 
for during  the  fiscal  year  next  to  ensue,  which  amount  must  in  no  case 
exceed  two  per  centum  of  the  aggregate  premiums  returned  as  received, 
as  provided  in  this  section,  and  the  whole  of  such  amount,  or  so  much 
thereof  as  may  be  necessary,  may  be  assessed  upon  all  insurance  com- 
panies, corporations,  associations,  underwriters,  agents,  person,  or  per- 
sons who  assume  risks  and  accept  premiums  for  fire  insurance  in  said 
municipality,  as  hereinbefore  mentioned,  in  proportion  to  the  several 
amounts  of  premiums  returned,  as  received  by  each,  as  hereinafter  pro- 
vided, and  such  assessment  is  collectible  by  and  in  the  name  of  said 
corporation,  in  any  court  of  law  in  the  State  of  California  having  juris- 
diction, in  such  manner  and  at  such  time  or  times  as  said  corporation  may 
determine.  In  order  to  provide  for  the  paj-ment  of  persons  employed  by 
said  corporation,  and  to  maintain  suitable  rooms,  and  apparatus  for  sav- 
ing life  and  property  contemplated,  said  corporation  is  empowered  to 
require  a  statement  to  be  furnished,  semiannually,  by  all  insurance 
companies,  corporations,  associations,  underwriters,  agents  or  persons  of 
the  aggregate  amount  of  premiums  received  for  insuring  property  in 
the  municipality  where  said  corporation  is  organized  or  established,  for 
and  during  the  six  months  next  preceding  the  first  day  of  July  and  the 
first  clay  of  January  of  each  year,  which  statement  must  be  sworn  to  by 


LIFE,    HEALTH,    ACCIDENT,    AND    ANNUITY    INSURANCE.  57 

the  president  or  secretary  of  the  corporation  or  association,  or  by  the 
agent  or  person  so  acting  or  effecting  such  insurance  in  said  munici- 
pality, and  must  be  handed  to  the  secretary  of  said  corporation  hereto- 
fore created  or  hereafter  to  be  created  under  the  provisions  of  this 
chapter  within  ten  days  after  the  first  day  of  July  and  the  first  day  of 
January  of  each  j^ear.  Said  secretary  must,  within  the  ten  days  afore- 
said, by  written  or  printed  demand  signed  by  him,  require  from  every 
insurance  company,  corporation,  association,  underwriter,  agent,  or  per- 
son engaged  in  the  business  of  fire  insurance  in  the  municipality  where 
said  corporation  is  organized  or  established,  the  statement  hereinbefore 
provided  for.  Such  demand  may  be  delivered  personally  at  the  office  of 
such  insurance  company,  corporation,  association,  underwriter,  agent  or 
person  within  said  municipality,  and  every  officer  of  such  insurance 
company,  corporation,  association,  and  every  such  underwriter,  agent  or 
person,  who,  for  fifteen  days  after  said  demand,  neglects  to  render  the 
statement  herein  provided  for,  forfeits  fifty  dollars  for  the  use  of  said 
corporation,  and  also  forfeits  for  its  use  twenty-five  dollars  in  addition 
for  every  day  he  so  neglects  after  the  expiration  of  the  said  fifteen  days, 
and  such  additional  penalty  may  be  computed  and  collected  up  to  the 
time  of  the  trial  of  any  action  brought  for  the  recovery  thereof.  The 
penalty  herein  provided  for  may  be  sued  for  and  collected,  with  costs,  in 
any  court  of  law  within  the  State  of  California  having  jurisdiction,  by 
and  in  the  name  of  said  corporation. 
Enacted,  Stats.  1905,  p.  572. 

The  statute  of  1875-6,  page  689,  concerning  the  powers  of  underwriters,  as 
amended  by  the  statute  of  1897,  page  22.°..  is  codified  in  the  foregoing  sections  of  the 
Civil  Code  (453«,  6,  c). 


CHAPTER  VI. 

LIFE,  HEALTH,  ACCIDENT,  AND  ANNUITY  OR  ENDOWMENT 
INSURANCE  ON  THE  ASSESSMENT  PLAN. 

Sec.  453rf.  Contracts  which  may  be  made  by,  defined. 

453e.  Formation  of  corporations;  issuing  of  contracts;  investments. 

453/.  Preexisting  corporations,  right  of  to  reincorporate. 

453<7.  Contracts  of  insurance,  contents  and  effects  of. 

453A.  Reserve  and  emergency  fund. 

453i.  Foreign  corporations,  conditions  precedent  to  doing  business  in  this  state. 

453;.  Limitations  upon  right  to  issue  contracts  of  insurance. 

453A*.  Exemptions  from  attachment  and  execution. 

453Z.  Statements  to  be  filed  with  the  insurance  commissioner ;  proceedings  to  be 

taken  by  him  thereon. 

453m.  Lapsing  of  policies  when  forbidden. 

453».  Fees  and  penalties. 

453o.  Insurance  commissioner  to  present  bills  for  certain  expenses. 

U53p.  Exemption  of  fraternal  societies  from  this  chapter. 

Contracts  which  may  be  made  by,  defined. 

Sec.  453c?.  Every  contract  whereby  a  benefit  may  accrue  to  a  party 
or  parties  therein  named  upon  the  death  or  physical  disability  of  a 
person  insured  thereunder,  or  for  the  payment  of  any  sums  of  money 
dependent  in  any  degree  upon  the  collection  of  assessments  or  dues 
from  persons  holding  similar  contracts,  is  deemed  a  contract  of  mutual 
insurance  upon  the  assessment  plan.  Such  contracts  must  show  that  the 
liabilities  of  the  insured  thereunder  are  not  limited  to  fixed  premiums. 

Enacted,  Stats.  1905,  p.  418. 


58  INSURANCE    LAWS   OF    CALIFORNIA. 

TTpon  the  insolvency  of  a  benefit  life  association  organized  upon  the  assessment 
plan,  the  reserve  fund  of  five  thousand  dollars  required  by  the  act  of  1891,  to  be 
held  and  deposited  in  trust  for  the  contract-holders  of  the  corporation,  is  designed  as 
an  emergency  fund,  to  be  used  only  in  case  of  the  insolvency  of  the  corporation,  and 
can  not  be  used  to  pay  the  benefits  due  from  the  corporation  while  solvent,  nor  is  it 
subject  to  any  liens  in  favor  of  policyholders,  nor  to  executions  for  any  debts  of  the 
corporation.  It  must  be  distributed  pro  rata  among  the  beneficiaries  for  whose 
benefit  the  policies  were  issued  ;  and  neither  the  members  of  the  association  per  capita 
nor  its  general  creditors  can  share  in  the  distribution.  {San  Francisco  Savings 
Union  vs.  Long,  123  Cal.  109.) 

The  term  "contract-holders"  has  been  defined  to  mean  holders  of  contracts  of 
life  insurance,  and  does  not  include  general  creditors,  or  holders  of  "debenture  con- 
tracts." who  have  loaned  money  to  the  company,  and  who  have  no  interest  in  tin* 
trust  fund  until  all  holders  of  insurance  have  been  paid  therefrom.  All  contract- 
holders  are  entitled  to  share  ratably  in  the  trust  funds  and  are  all  necessary  parties 
to  a  distribution,  which  can  not  be  had  except  upon  a  bill  in  equity  in  the  nature  of 
a  creditors'  bill,  upon  the  hearing  of  which  with  all  parties  interested  before  it.  the 
court  may  make  distribution  and  appoint  a  receiver  to  carry  distribution  into  effect. 
(Engwicht  vs.  Pacific  States,  etc.  Co.,  153  Cal.  183.) 

A  contract  issued  by  the  Home  Protective  Association  of  Santa  Barbara  provid- 
ing that  the  member  is  entitled  "to  one  half  all  necessary  medical  treatment,  free  of 
charge,  by  any  local  physician"  and  for  a  funeral  benefit  not  to  exceed  $100.00  on  the 
death  of  each  contract-holder,  is  not  a  contract  for  service  but  one  of  insurance : 
Opinion  of  Attorney  for  Insurance  Commissioner,  February  16,  1911. 

Formation  of  corporations;  issuing  contracts;  investments. 

Sec.  453c.  Corporations  may  be  formed  to  earry  on  the  business  of 
mutual  insurance  upon  the  assessment  plan,  and  are  subject  only  to  the 
provisions  of  this  chapter.  No  such  corporation  must  issue  contracts  of 
insurance  until  at  least  two  hundred  persons  have  applied,  in  writing, 
for  membership  or  insurance  therein,  and  have  paid  to  the  treasurer  of 
such  corporation  the  sum  of  five  thousand  dollars.  This  sum  must  be 
invested  in  bonds  or  securities,  approved  by  the  insurance  commissioner 
of  this  state,  or  deposited  in  some  bank  in  this  state  where  it  will  earn 
interest.  Said  bonds  or  securities,  or  evidences  of  such  deposit,  must  be 
placed,  through  the  insurance  commissioner  of  this  state,  with  the  state 
treasurer,  and  the  principal  sum  must  be  held  in  trust  for  the  contract- 
holders  of  such  corporation,  with  the  right  in  the  corporation  to  exchangi- 
said  bonds,  securities,  or  evidence  of  bank  deposit  for  others  of  like 
value.  Such  corporation  must  also,  as  a  condition  precedent  to  issuing 
any  contracts  of  insurance,  obtain  the  written  certificate  of  the  insurance 
commissioner  that  it  has  complied  with  the  requirements  of  this  chapter; 
and  that  the  name  of  the  corporation  is  not  the  same  as  that  of  any 
other  corporation  of  this  or  other  states,  as  indicated  by  the  insur- 
ance department  reports  in  his  office ;  nor  must  the  commissioner  approve 
any  name  or  title  so  closely  resembling  another  as  to  mislead  the  public. 
No  corporation  formed  hereunder  has  legal  existence  after  one  year  from 
the  date  of  its  articles,  unless  its  organization  has  been  completed  and 
business  commenced;  nor  must  any  corporation  or  individual  solicit,  or 
cause  to  be  solicited,  any  business,  until  such  corporation  has  com- 
plied with  the  provisions  of  section  633  of  the  Political  Code.  Nothing 
contained  in  this  chapter  shall  be  con  trued  to  exempt  any  corporation 
from  the  provisions  of  sections  296  and  299  of  this  code. 

Enacted.  Stats.  1905.  p.  418. 

See  note  to  section  453tf,  ante.  .  . 

Before  one  of  these  corporations  can  be  declared  insolvent,  it  has  a  right  to  be 
heard  before  the  insurance  commissioner,  and  the  superior  court  at  the  suit  of  a 
creditor  or  stockholder  has  no  right  to  appoint  a  receiver. 

A  complete  remedy  by  proceeding  instituted  by  the  attorney  general,  after  exam- 
ination by  the  commissioner,  is  provided  by  section  10  of  the  act  of  1891.  There  is 
no  other  method  provided  in  the  act  by  which  the  authority  of  the  corporation  to  do 
business  can  be  revoked.      (Murray  vs.  Superior  Court,  129  Cal.  628.) 

See  section  4531,  post. 


LIFE,    HEALTH,    ACCIDENT,    AND    ANNUITY    INSURANCE.  59 

The  act  evidently  contemplates  that  there  must  he  such  confidence  in  the  proposed 
scheme  that  at  least  two  hundred  persons  can  be  found  who  will  apply  for  member- 
ship or  insurance  and  pay  in  the  prescribed  amount  of  money — not  that  any  one  or 
two  promoters  can  evade  that  provision  by  themselves  putting  up  some  sort  of 
security.      {Stevens  vs.  Reeves,  13S  Cal.  6S3. ) 

To  recover  upon  a  certificate  of  membership  which  entitled  the  holder  to  a  benefit 
of  ten  thousand  dollars,  payable  in  five  equal  installments  or  endowments,  five 
coupons  being  attached  to  the  certificate  for  two  thousand  dollars  each,  to  mature 
at  different  periods  of  time,  on  the  falling  due  of  the  first  coupon,  after  demand,  the 
holder  brought  suit  against  the  corporation  and  joined  the  treasurer  of  the  State  of 
California  as  a  defendant,  as  the  holder  of  securities  under  the  act  upon  which  the 
holder  claimed  a  lien. 

The  court  gave  judgment  for  plaintiff,  and  on  appeal  the  supreme  court  affirmed 
the  judgment,  holding  the  treasurer  to  be  a  proper  party  defendant.  (Kruger  vs.  Life 
</ii(l  Annuity   Association   et  al.,  106  Cal.  99.) 

Preexisting  corporations,  right  of  to  reincorporate. 

Sec.  453/.  Any  existing  corporation  engaged  in  the  business  of  life, 
health,  accident,  or  endowment  insurance  on  the  assessment  plan  may 
reincorporate  under  the  provisions  of  this  code  and  chapter,  but  it  is  not 
obliged  to  do  so,  and  may,  without  such  reincorporation,  exercise  the 
rights,  powers  and  privileges  conferred  by  this  chapter. 

Enacted,  Stats.  1905,  p.  419. 

Where  a  so-called  corporation  had  for  many  years  been  carrying  on  the  husiness 
of  insurance  on  the  mutual  henefit  plan,  the  members  assenting  to  the  by-laws  on 
joining,  although  not  properly  incorporated,  nor  complying  with  the  provisions  of  the 
act  of  March.  1891,  payments  voluntarily  made  by  the  members,  can  not  in  the 
absence  of  fraud,  be  recovered  from  the  officers.     (Perkins  vs.  Fish,  121  Cal.  317.) 

Contracts  of  insurance,  contents  and  effect  of. 

Sec.  453g\  Every  contract  of  insurance  issued  by  such  corporation 
must  specify  the  sum  or  sums  to  be  paid  upon  the  happening  of  the  con- 
tingency insured  against,  and  when  such  payments  must  be  made.  Un- 
less the  contract  is  invalidated  by  fraud  or  by  breach  of  its  conditions, 
the  corporation  is  obligated  to  pay  the  beneficiary  the  amount  or 
amounts  specified  in  its  contract  at  the  time  or  times  therein  named,  and 
such  indebtedness  is  a  lien  upon  all  the  property  of  such  corporation, 
with  priority  over  all  indebtedness  thereafter  incurred,  except  as  here- 
inafter provided  in  case  of  insolvency.  Failure  to  make  such  payment, 
within  thirty  days  after  notice,  at  the  home  office,  by  mail,  as  provided 
by  law.  of  a  final  judgment,  unless  waiver  is  made  by  the  beneficiary, 
constitutes  a  forfeiture  of  the  right  to  do  business. 

Enacted,  Stats.  1905,  p.  419. 

Reserve  and  emergency  fund. 

Sec.  453A.  Every  domestic  corporation,  organized  to  do  or  doing 
business  of  insurance  on  the  assessment  plan,  must  accumulate  a  reserve 
or  emergency  fund,  which  must,  at  all  times,  be  not  less  than  the  largest 
benefit  contracted  to  be  paid  by  it  to  any  one  person.  Every  corpora- 
tion organized  under  the  provisions  of  this  chapter  must  accumulate  such 
fund  within  a  year  from  the  date  of  its  certificate  of  incorporation. 
Such  fund,  to  the  extent  of  the  largest  amount  contracted  to  be  paid  by 
any  such  corporation  to  any  one  person,  must  be  invested  and  deposited, 
as  provided  in  section  453e,  with  the  right  in  the  corporation  to  exchange 
any  such  securities  for  others  of  equal  value.  The  deposit  required  by 
section  4536  constitutes  a  part  of  the  reserve  required  by  this  section, 
;M  the  option  of  such  corporation.  When  any  such  corporation  discon- 
tinues business,  this  fund  must  be  returned  to  such  corporation,  or  dis- 


60  INSURANCE   LAWS   OF    CALIFORNIA. 

posed  of  as  may  be  determined  by  the  superior  court  of  the  county  in 
which  is  its  principal  place  of  business. 
Enacted,  Stats.  1905,  p.  419. 

San  Francisco  Savings  Union  vs.  Long,  123  Cal.  107,  118. 
See  note  to  section  453d,  ante. 

Foreign  corporations,  conditions  precedent  to  doing  business  in  this  state. 

Sec.  453i.  Corporations  organized  under  the  laws  of  any  other  state 
or  country  to  transact  the  business  of  mutual  assessment  insurance  must. 
as  a  condition  precedent  to  transacting  business  in  this  state,  comply 
with  the  provisions  of  sections  405  and  408  of  this  code,  and  deposit  with 
the  insurance  commissioner  of  this  state  a  certified  copy  of  its  charter 
or  other  instrument  required  by  its  home  authorities ;  a  statement  under 
oath,  of  its  president  or  secretary,  of  its  business  for  the  preceding  year, 
in  such  form  as  may  be  required  by  the  insurance  commissioner  of  this 
state ;  an  appointment  of  a  general  agent,  service  upon  whom  binds  the 
corporation;  a  certificate  that  for  the  next  preceding  twelve  months  it 
has  paid  in  full  the  maximum  amount  named  in  its  contract  of  insur- 
ance; a  certificate  from  the  proper  officer  of  its  state  or  government 
that  like  corporations  of  this  state  are  legally  entitled  to  do  business 
in  such  state  or  country;  copies  of  its  contracts  of  insurance  and  appli- 
cations, which  must  show  that  the  liabilities  of  its  members  are  not 
limited  to  fixed  premiums;  and  evidence,  satisfactory  to  the  insurance 
commissioner,  that  the  corporation  has  accumulated  a  fund  equal  to  that 
required  of  like  corporations  in  this  state,  constituting  a  reserve  or  sur- 
plus fund,  held  in  trust  for  the  benefit  of  its  contract-holders,  and  so 
invested  and  held  as  required  by  the  laws  of  the  state  or  government 
under  which  such  corporation  was  organized.  The  insurance  commis- 
sioner must  thereupon  issue  a  license  to  such  corporation  to  do  business 
in  this  state.  This  license  must  be  renewed  annually,  and  may  be 
revoked  whenever  it  is  ascertained  that  the  statements  required  to  be 
made  by  this  section  are  not  true.  Upon  such  revocation,  notice  thereof 
must  be  given  by  the  insurance  commissioner  by  publication  in  some 
newspaper  published  in  the  city  and  county  of  San  Francisco,  for  two 
weeks,  daily,  and  no  new  contracts  must  be  made  by  such  company  in 
this  state.  When  any  other  state  or  country  imposes  any  additional 
license,  fees,  taxes  or  penalties  upon  any  corporation  organized  or  doing 
business  under  this  chapter,  like  license,  fees,  taxes  or  penalties  are 
imposed  upon  corporations  of  the  same  kind  and  their  agents  of  such 
state  or  country  doing  business  in  this  state. 

Enacted,  Stats.  1905,  p.  419. 

Limitations  upon  right  to  issue  contracts  of  insurance. 

Sec.  453,;.  No  corporation  doing  business  under  this  chapter,  except 
accident  or  casualty  corporations,  must  issue  a  contract  of  insurance 
upon  the  life  of  any  person  under  fifteen  nor  over  sixty-one  years  of 
age.  Every  such  contract  of  insurance  must  be  founded  upon  written 
application  therefor,  and,  except  where  the  application  is  for  health, 
accident  or  casualty  insurance  only,  or  for  one  hundred  dollars  life 
insurance  or  less,  such  application  must  be  accompanied  by  the  report  of 
a  reputable  physician,  containing  a  detailed  statement  of  his  examina- 
tion of  the  applicant,  showing  the  applicant  to  be  in  good  health,  and 
recommending  the  issuance  of  a  contract  of  insurance.  Any  solicitor, 
agent,  employee,  examining  physician,  or  other  person,  making  a  false 


life,  health,  accident,  and  annuity  insurance.  61 

or  fraudulent  statement  to  any  corporation  doing  business  under  this 
chapter,  with  reference  to  any  application  for  insurance,  or  for  the  pur- 
pose of  obtaining  any  money  or  benefit  from  such  corporation,  is  guilty 
of  a  misdemeanor ;  and  any  person  who  makes  a  false  statement  of  any 
material  fact  or  thing  in  a  sworn  statement  as  to  the  death  or  disability 
of  a  contract-holder,  in  any  such  corporation  for  the  purpose  of  pro- 
curing or  aiding  the  beneficiary  or  beneficiaries  or  contract-holder  in 
procuring  the  payment  of  a  benefit  named  in  the  contract,  is  guilty  of 
perjury. 

Enacted,  Stats.  1905,  p.  420. 

Exemptions  from  attachment  and  execution. 

Sec.  453&.  The  money,  benefit,  annuity,  endowment,  charity,  relief, 
or  aid  to  be  paid  as  provided  by  the  contracts  issued  by  any  corporation 
doing  business  under  this  chapter,  is  not  liable  to  attachment  or  other 
process,  nor  to  be  seized,  taken,  appropriated  or  applied  by  any  legal  or 
equitable  process,  nor  by  operation  of  law,  to  pay  any  debts  or  liability 
of  the  contract-holder  or  any  beneficiary  named  thereunder. 

Enacted,  Stats.  1905,  p.  421. 

Statements  to  be  filed  with  the  insurance  commissioner;  proceedings  to  be 
taken  by  him  thereon. 

Sec.  453/.  Every  corporation,  whether  domestic  or  foreign,  doing 
the  business  of  effecting  insurance  on  the  assessment  plan  must,  an- 
nually, on  or  before  the  first  day  of  February,  file  with  the  insurance 
commissioner,  in  such  form  as  lie  may  prescribe,  a  statement  of  its  affairs 
for  the  year  ending  on  the  preceding  thirty-first  day  of  December.  The 
insurance  commissioner,  in  person  or  by  duly  authorized  deputy,  has  the 
power  of  examination  into  the  affairs  of  any  domestic  corporation  doing 
business  or  claiming  to  do  business  under  this  chapter,  at  any  time,  in 
his  discretion,  and  must  make  such  examination  at  least  once  a  year.  If 
he,  after  an  examination  of  the  affairs  of  a  corporation,  finds  that  it  is 
not  doing  its  business  in  conformity  to  this  chapter,  or  that  it  is  doing  a 
fraudulent  or  unlawful  business,  or  that  it  is  not  carrying  out  its  terms 
of  contract,  or  that  it  can  not,  within  three  months  from  the  date  of 
notice  of  default,  pay  its  obligations,  he  must  cite  the  president,  secre- 
tary, manager  or  general  agent  of  the  corporation,  or  all  of  them,  to 
appear  before  him,  stating  the  time  and  place,  to  show  cause  why  the 
authority  of  the  corporation  to  do  business  should  not  be  revoked,  and 
if  cause  is  not  shown,  then  he  must  report  the  facts  to  the  attorney  gen- 
eral of  the  state,  who  must  commence  proceedings  in  the  proper  court  to 
restrain  the  corporation  from  doing  any  further  business. 

Enacted,  Stats.  1905,  p.  421. 

Murray  vs.  Superior  Court,  129  Cal.  628,  633. 
See  note  to  section  453e,  ante. 

Lapsing  of  policies  when  forbidden. 

Sec.  453m.  No  policy  or  certificate  issued  by  any  corporation  or 
association  doing  business  under  the  provisions  of  this  chapter  lapses 
for  the  non-payment  of  any  assessments,  dues  or  premiums,  unless  the 
corporation  or  association  has  first  mailed  to  the  insured  under  such 
policy  or  certificate,  at  his  or  her  last  given  post-office  address,  a  notice 
setting  forth  the  amount  to  be  paid,  and  the  time  the  same  is  due  and 
payable;  and  such  notice  must  be  mailed  at  least  fifteen  days  before  the 


62  INSURANCE   LAWS   OF    CALIFORNIA. 

assessment  is  due;  provided,  that  such  corporations  doing  business  under 
Hi  is  chapter  as  collect  specific  amounts  at  specific  dates,  as  contained  in 
the  contract,  are  not  compelled  to  send  such  notices;  and  an  affidavit 
made  by  the  officer,  bookkeeper  or  clerk  of  any  such  corporation  having 
charge  of  the  mailing  of  notices,  setting  forth  the  facts  as  they  appear 
on  the  records  in  the  office  of  the  said  corporation,  showing  that  such 
notice  was  mailed  and  the  date  of  mailing,  is  conclusive  evidence  of  the 
mailing  of  such  notice. 

Enacted,  Stats.  1905,  p.  421. 

Fees  and  penalties. 

Sec.  453 n.  The  fees  for  filing  statements,  certificates,  or  other  docu- 
ments required  by  this  chapter,  or  for  any  service  or  act  of  the  insurance 
commissioner,  and  the  penalties  for  any  violation  of  this  chapter,  must, 
except  as  otherwise  provided  herein,  be  the  same  as  provided  in  the  laws 
of  this  state  relating  to  life  insurance  companies,  and  must  be  disposed 
of  as  provided  by  such  laws. 

Enacted,  Stats.  1905,  p.  422. 

Insurance  commissioner  to  present  bills  for  certain  expenses. 

Sec.  453o.  For  all  lawful  expenses  under  this  chapter,  or  by  reason 
of  any  of  its  provisions,  in  the  prosecution  of  any  suit  or  proceeding,  or 
otherwise,  for  the  enforcement  of  the  provisions  of  this  chapter,  the 
insurance  commissioner  must  present  bills,  duly  certified  by  him,  and 
accompanied  with  vouchers,  to  the  state  board  of  examiners,  who  may 
allow  the  same,  and  direct  payment  thereof  to  be  made ;  and  the  state 
controller  must  draw  warrants  therefor  on  the  state  treasurer  for  the 
payment  of  the  same  to  the  insurance  commissioner,  out  of  the  general 
fund,  in  addition  to  the  ordinary  contingent  expense. 

Enacted,  Stats.  1905,  p.  422. 

Exemption  of  fraternal  societies  from  this  chapter. 

Sec.  453p.  The  provisions  of  this  chapter  do  not  apply  to  secret  or 
fraternal  societies,  lodges  or  councils,  which  conduct  their  business  and 
secure  membership  on  the  lodge  system  exclusively,  having  ritualistic 
work  and  ceremonies  in  their  societies,  lodges  or  councils,  nor  to  any 
mutual  or  benefit  association  organized  or  formed  and  composed  of  mem- 
bers of  any  such  society,  lodge  or  council  exclusively. 

Enacted,  Stats.  1905,  p.  422. 

The  foregoing  sections  of  the  Civil  Code  (4r>3</.  c,  /,  g,  h,  i,  /,  Jfc,  /,  w,  n,  o,  p)  are  a 
codification  of  the  statutes  of  1891,  page  12(>,  relating  to  life,  health,  accident  and 
annuity  endowment  insurance  on  the  assessment  plan. 


CHAPTER  VII. 

TITLE  INSURANCE  CORPORATIONS. 

Sec.  453«.  Title  insurance  companies  subject   to   insurance   laws   and   to   insurance 
commissioner. 

453*.  Guarantee  fund  and  investments. 

453u.  Title  insurance  surplus  fund. 

453t>.  Policy  of  title  insurance  defined. 

453w.  Further  powers  of  title  insurance  companies. 

453#.  Combined  title  insurance  and  trust  company. 

453//.  Must  have  certificate  of  insurance  commissioner. 

453z.  Loans  to  directors,  officers  and  employees. 

Sec.  453s.     Every  title  insurance  company  shall  be  subject  to  and 
shall  comply  with  all  the  requirements  of  the  insurance  laws  and  the 


TITLE   INSURANCE   CORPORATIONS.  63 

rules  and  regulations  of  the  insurance  department  of  this  state,  and  the 
insurance  commissioner  shall  have  the  same  power  and  authority  regard- 
ing any  such  corporation  that  lie  may  exercise  in  relation  to  other  insur- 
ance corporations  organized  under  the  Jaws  of  this  state,  including  the 
right  to  examine  and  inspect  the  financial  condition  and  affairs  of  such 
company  relating  to  the  insurance  business  of  such  company,  and  to 
compel  compliance  with  the  provisions  of  law  governing  any  such  cor- 
poration. 

Stats.  1913,  p.  490. 

Sec.  453£.  Every  title  insurance  company,  before  issuing  any  guar- 
antee or  policy  of  insurance  shall  deposit  as  a  "  guarantee  fund ' '  for  the 
benefit  of  the  holders  of  such  guarantees  and  policies  of  insurance,  the 
sum  of  one  hundred  thousand  dollars  in  the  securities  mentioned  in  sub- 
divisions one,  two,  three,  four  and  five  of  section  421  of  the  Civil  Code, 
in  which  the  capital  and  accumulations  of  insurance  companies  are 
allowed  by  the  laws  of  this  state  to  be  invested.  Said  securities  shall 
be  subject  to  the  approval  of  the  insurance  commissioner,  and  shall  be 
deposited  with  the  treasurer  of  state,  and  said  treasurer  shall  give  his 
receipt  therefor,  and  the  state  shall  be  responsible  for  their  custody  and 
site  return.  Said  securities  so  deposited  may  be  exchanged  from  time 
to  time,  with  the  approval  of  the  insurance  commissioner,  for  other 
securities  receivable  as  aforesaid,  and  so  long  as  the  company  so  deposit- 
ing said  securities  shall  continue  solvent,  said  company  shall  have  the 
right  and  shall  be  permitted  by  the  state  treasurer  to  receive  the  in- 
teresl  and  dividends  on  the  securities  so  deposited.  Said  securities 
shall  be  subject  to  sale  and  transfer  and  to  the  disposal  of  the  proceeds 
by  said  treasurer,  only  on  the  order  of  a  court  of  competent  jurisdiction, 
and  for  the  benefit  of  the  holders  of  such  guarantees  and  policies  of 
insurance.  When  any  part  of  such  deposit  is  made  in  bonds  secured  by 
mortgages  or  deeds  of  trust  of  real  property,  or  in  loans  upon  real  prop- 
erty secured  by  mortgages  or  deeds  of  trust,  such  mortgages  or  deeds  of 
trust  shall  be  accompanied  by  evidence  of  title  issued  by  a  person, 
company,  or  corporation  designated  or  approved  by  the  insurance  com- 
misioner  and  authorized  by  law  or  otherwise  found  by  the  insurance 
commissioner  to  be  competent  to  issue  such  evidence  of  title.  Such  evi- 
dence of  title  shall  consist  either  of  a  full  abstract  of  title,  a  full  certifi- 
eate  of  title,  or  a  policy  of  title  insurance,  and  such  evidence  of  title 
shall  be  examined  and  approved  by  op  under  the  direction  of  the  insur- 
ance commissioner.  The  value  of  the  property  covered  by  each  such 
mortgage  or  deed  of  trust,  shall  be  appraised  by  one  or  more  appraisers 
selected  or  approved  by  the  insurance  commissioner.  The  appraisers 
shall  be  residents  of  the  county  in  which  the  property  or  some  part 
thereof  is  situated.  The  reasonable  cost  of  examining  such  evidence  of 
title  and  of  making  such  appraisement,  shall  be  paid  by  the  title  insur- 
ance company  making  such  deposit,  and  shall  not  exceed  twenty  dollars 
for  examining  the  title  to  the  property  covered  by  each  mortgage  or 
deed  of  trust,  nor  five  dollars  for  each  appraiser,  not  exceeding  two, 
besides  the  necessary  expenses  of  such  appraisers.  Any  such  corpora- 
tion organized  under  the  laws  of  this  state  and  having  a  capital  stock 
paid  in,  in  cash,  of  more  than  one  hundred  thousand  dollars  and  after 


64  INSURANCE   LAWS   OF   CALIFORNIA. 

depositing  said  guarantee  fund  as  above  provided,  may  invest  an  amount 
not  exceeding  fifty  per  cent  of  its  subscribed  capital  stock  in  the  prepa- 
ration and  purchase  of  materials  or  plant  necessary  to  enable  it  to  en- 
gage in  such  title  insurance  business ;  and  such  materials  or  plant  shall 
be  deemed  an  asset,  valued  at  the  actual  cost  thereof,  in  all  statements 
and  proceedings  required  by  law  for  the  ascertainment  and  determina- 
tion of  the  condition  of  such  corporation,  or  at  such  lesser  value  as  may 
be  estimated  by  such  corporation  in  any  such  statement  or  proceeding, 
or  omitted  entirely  therefrom. 

Stats.  1913,  p.  490. 

Sec.  453m.  Every  title  insurance  company  shall  annually  set  apart 
a  sum  equal  to  ten  per  cent  of  its  premiums  collected  during  the  year, 
which  sums  shall  be  allowed  to  accumulate  until  a  fund  shall  have  been 
created  equal  in  amount  to  twenty-five  per  cent  of  the  subscribed  capital 
stock  of  such  corporation.  Such  fund  shall  be  maintained  as  a  further 
security  to  holders  of  the  guarantees  and  policies  of  insurance  issued  by 
such  corporation,  and  shall  be  known  as  the  "Title  insurance  surplus 
fund";  and  if  at  any  time  such  fund  shall  be  impaired  by  reason  of  a 
loss,  the  amount  by  which  it  may  be  impaired  shall  be  restored  in  the 
manner  hereinabove  provided  for  its  accumulation.  The  reporting  of  a 
loss  shall  be  deemed  an  impairment  of  such  fund  for  the  purposes  of 
this  section.  Such  corporation  must  not  make  any  dividends  except 
from  profits  remaining  on  hand  after  retaining  unimpaired : 

1.  The  entire  subscribed  capital  stock. 

2.  The  amount  set  apart  as  a  surplus  fund  under  the  provisions  of 
this  section. 

3.  A  sum  sufficient  to  pay  all  liabilities  for  expenses  and  taxes,  and 
all  losses  reported  or  in  course  of  settlement,  without  impairment  of  the 
title  insurance  surplus  fund  required  to  be  set  apart  as  hereinabove 
provided. 

Sec.  453f.  Any  written  contract  or  instrument  purporting  to  show 
the  title  to  real  property,  or  furnish  information  relative  thereto,  which 
shall  in  express  terms  purport  to  insure  or  guarantee  such  title  or  the 
correctness  of  such  information,  shall  be  deemed  a  policy  of  title  in- 
surance. 

Stats.  1913,  p.  491. 

Sec.  453m\  Every  title  insurance  company  organized  under  the  laws 
of  this  state  shall  also  have  power  to  guarantee  or  insure  the  identity, 
due  execution,  and  validity  of  any  note  or  bond  secured  by  mortgage  or 
trust  deed,  and  the  identity,  due  execution  and  validity  and  recording 
of  any  such  mortgage  or  trust  deed,  and  the  identity,  due  execution  and 
validity  of  bonds,  notes  or  other  evidence  of  indebtedness  issued  by  this 
state,  or  by  any  county,  city  and  county,  city,  school  district,  irrigation 
trict,  or  other  municipality  or  district  therein,  or  of  any  private  or 
public  corporation,  and  to  act  as  registrar  or  transfer  agent  of  this  state, 
or  of  any  county,  city  and  county,  city,  school  district,  irrigation  dis- 
trict, or  other  municipality  or  district  therein,  or  of  any  private  or 
public  corporation,  and  to  transfer  or  countersign  any  such  bonds,  notes 
or  other  evidence  of  indebtedness  and  to  transfer  or  countersign  certifi- 
cates of  stock  of  any  private  or  public  corporation. 

Stats.  1913,  p.  491. 


TITLE   INSURANCE   CORPORATIONS.  65 

Sec.  453;r.  Any  title  insurance  corporation  incorporated  under  the 
general  incorporation  laws  of  this  state,  authorized  by  its  articles  of 
incorporation  to  act  as  executor,  administrator,  guardian,  assignee,  re- 
ceiver, depositary,  agent  or  trustee,  or  to  do  a  general  trust  business, 
and  having  a  capital  of  not  less  than  three  hundred  thousand  dollars 
actually  paid  in,  in  cash,  may  also  do  business  as  a  trust  company,  and 
maintain  a  trust  department  as  well  as  a  title  insurance  department,  on 
compliance  with  the  following  conditions : 

1.  When  such  title  insurance  company  desires  to  do  such  a  depart- 
mental business,  it  shall  first  obtain  the  consent  of  both  the  superintend- 
ent of  banks  and  of  the  insurance  commissioner,  and  in  its  application 
for  such  consent,  must  file  a  statement  making  a  segregation  of  its  capital 
and  surplus  for  each  such  department.  At  least  two  hundred  thousand 
dollars  of  its  capital  must  be  apportioned  by  such  statement  to  its  trust 
department.  Ihe  respective  portions  of  such  capital  and  surplus,  when 
such  apportionment  has  been  approved  by  the  superintendent  of  banks 
and  by  the  insurance  commissioner,  shall  be  considered  and  treated  as 
the  separate  capital  and  surplus  of  each  such  department  respectively, 
as  if  each  such  department  was  a  separate  business. 

2.  Such  company,  as  to  its  title  insurance  department,  shall  be  subject 
to  and  shall  comply  with  all  the  requirements  of  the  insurance  laws  and 
the  rules  and  regulations  of  the  insurance  department  of  this  state,  and 
may  invest  its  capital  apportioned  to  its  title  insurance  department, 
and  the  accumulations  therefrom,  in  the  securities  in  which  the  capital 
and  accumulations  of  insurance  companies  are  allowed  by  the  laws  of 
this  state  to  be  invested,  including  the  materials  and  plant  necessary  to 
enable  it  to  engage  in  the  title  insurance  business,  as  provided  in  this 
chapter. 

3.  Such  company,  as  to  its  trust  department,  shall  be  subject  to  and 
shall  comply  with  all  the  requirements  of  the  banking  laws  and  the  rules 
and  regulations  of  the  state  banking  department  of  this  state,  and  may 
invest  its  capital  apportioned  to  its  trust  department,  and  the  accumula- 
tions therefrom,  and  trust  funds  received  by  it,  in  accordance  with  the 
laws  of  tli is  state  relative  to  the  investment  of  funds  of  trust  companies. 

Stats.  1913,  p.  492. 

Sec.  453t/.  No  corporation  shall  make  any  contract  or  issue  any  pol- 
icy of  guarantee  or  insurance  affecting  titles  to  real  estate,  or  engage  in 
the  business  of  a  title  insurance  company,  until  it  has  obtained  from  the 
insurance  commissioner  his  certificate  that  such  company  has  complied 
with  the  provisions  of  this  chapter  and  is  duly  authorized  to  do  business 
as  such  title  insurance  company;  provided,  hoivever,  that  any  corpora- 
tion heretofore  organized  under  the  laws  of  this  state  for  the  purpose 
of  issuing  policies  of  insurance  affecting  title  to  real  estate,  or  for  the 
purpose  of  carrying  on,  and  which  is  actually  engaged  in  the  business 
of  title  insurance,  or  of  issuing  policies  of  insurance  affecting  titles  to 
real  estate,  shall  be  subject  to  and  shall  be  entitled  to  all  the  rights  and 
privileges  of  a  title  insurance  company  under  the  provisions  of  this 
chapter,  by  depositing  with  the  state  treasurer  the  guarantee  fund  re- 
quired to  be  deposited  by  title  insurance  corporations;  provided,  such 
deposit  is  made  at  any  time  prior  to  the  first  day  of  January,  A.  D.  1914, 
and  any  such  corporation  heretofore  organized  shall  have  the  right  to 
continue  to  transact  such  business  until  said  date;  and  provided,  also, 


66  INSURANCE    LAWS    OF    CALIFORNIA. 

that  the  failure  to  deposit  said  guarantee  fund  prior  to  said  date  shall 
be  deemed  an  abandonment  of  all  such  rights  and  privileges. 

Stats.  1913,  p.  492. 

Sec.  4532.  No  loan  shall  be  made  by  any  title  insurance  company, 
directly  or  indirectly,  to  any  of  its  officers  or  directors  or  employees  or 
to  any  member  of  the  family  of  any  officer  or  director.  Any  officer, 
director,  agent  or  employee  of  any  such  company  who  knowingly  con- 
sents to  any  violation  of  the  terms  or  provisions  of  this  section  shall  be 
guilty  of  a  misdemeanor. 

Stats.  1913,  p.  493. 


CHAPTER  VIII. 

MORTGAGE  INSURANCE. 

Sec.  453oo.     Mortgage    insurance    companies    subject    to    insurance    laws    and    to 

insurance  commissioner. 
45366.     Policy  of  mortgage  insurance  defined. 
453cc.      Capital  stock  of  mortgage  insurance  companies. 
4X3(1(1.     Kind  and  amount  of  securities  that  may  be  guaranteed. 
453ee.      Guaranteed     mortgages    and     trust    deeds     to    be    legal     investments. 

Premiums  may  he  paid  from  income. 
453//.      Must  have  certificate  of  insurance  commissioner. 
453//</.      Loans  and  investments. 
45366.     Quarterly  reports  to  insurance  commissioner. 

Sec.  453aa.  The  insurance  commissioner  shall  have  the  same  power 
and  authority  regarding  any  mortgage  insurance  corporation  that  he 
may  exercise  in  relation  to  other  insurance  corporations  organized  under 
the  laws  of  this  state,  including  the  right  to  examine  and  inspect  the 
financial  condition  and  affairs  of  such  company,  and  to  compel  compli- 
ance with  the  provisions  of  law  governing  anv  such  corporation. 

Stats.  1913,  p.  479. 

Sec.  453&fr.  A  certificate  or  guaranty  issued  by  a  mortgage  insur- 
ance company  organized  under  the  laws  of  this  state,  whether  such 
certificate  represents  or  refers  to  a  particular  note  or  bond  secured  by 
mortgage  or  trust  deed  in  its  entirety,  or  represents  or  refers  to  an 
undivided  or  other  partial  interest  in  a  note  or  notes  or  in  a  bond  or 
bonds  secured  by  mortgage  or  trust  deed  or  in  a  group  of  several  such 
notes  or  bonds  and  in  the  mortgages  and  trust  deeds  securing  the  same, 
which  certificate  or  guaranty  purports  to  guarantee  the  payment  of  the 
principal,  interest  or  other  sums  agreed  to  be  paid  under  the  terms  of 
any  such  note  or  bond  secured  by  mortgage  or  trust  deed,  or  other  sums 
secured  under  the  terms  of  any  such  mortgage  or  trust  deed  and  the 
guaranteeing  or  insuring,  directly  or  indirectly,  against  loss  thereon, 
shall  be  deemed  a  policy  of  mortgage  insurance. 

When  such  certificate  or  guaranty  represents  or  refers  to  an  undivided 
or  other  partial  interest  as  above  stated,  the  policy  containing  the  same 
may  be  referred  to  as  and  is  hereby  designated  as  a  "mortgage  partici- 
pation certificate,"  and  when  such  certificate  or  guaranty  represents  or 
refers  to  an  entire  interest  as  above  stated,  the  policy  containing  the 
same  may  be  referred  to  as  and  is  hereby  designated  as  a  "mortgage 
guaranty"  or  an  "entire  mortgage  guaranty." 

Stats.  1913,  p.  479. 


MORTGAGE    INSURANCE.  67 

Sec.  453cc.  No  mortgage  insurance  company  shall  issue  in  California 
any  policy  of  mortgage  insurance  without  having  a  capital  stock  of  at 
least  one  hundred  thousand  dollars  fully  paid  in,  in  cash. 

Stats.  1913,  p.  470. 

Sec.  453dd.  No  mortgage  insurance  company  shall  guarantee  the 
payment  of  any  note  or  bond  secured  by  any  mortgage  or  trust  deed 
except  the  same  be  a  first  lien  upon  a  marketable  title  in  fee  to  the  prop- 
erty covered  thereby.  No  mortgage  insurance  company  shall  guarantee 
under  any  mortgage  or  trust  deed  a  principal  amount  exceeding  sixty 
per  centum  of  the  market  value  of  the  real  estate  taken  as  security  there- 
for. No  mortgage  insurance  company  shall  have  at  any  time  outstand- 
ing policies  of  mortgage  insurance  exceeding  in  amount  of  principal 
guaranteed  thereunder  twenty  times  the  amount  of  its  paid-in  capital 
and  surplus;  and  provided,  also,  that  certificates  so  issued,  or  guarantees 
so  made  or  policies  so  issued  by  mortgage  insurance  companies  organized 
under  the  provisions  of  this  act  shall  not  be  deemed  to  be  debts  created 
by  the  directors  in  violation  of,  or  contrary  to  the  provisions  of  section 
three  hundred  nine  of  the  Civil  Code,  nor  make  the  directors  or  any  of 
them  liable  thereon.  No  loan  shall  be  made  by  any  mortgage  insurance 
company  directly  or  indirectly  to  any  of  its  officers  or  directors.  A 
violation  of  any  of  the  terms  or  provisions  of  this  section  shall  not  make 
any  policy  or  guarantee  of  such  company  void  or  voidable,  but  any 
officer,  director,  agent  or  other  employee  of  any  such  company  who 
knowingly  consents  to  any  violation  of  any  of  the  terms  or  provisions  of 
this  section  shall  be  guilty  of  a  misdemeanor. 

Stats.  1913,  p.  47!). 

Sec.  453<  < .  Mortgages  or  trust  deeds,  guaranteed  by  any  such  mort- 
gage insurance  company,  in  compliance  with  the  terms  of  this  chapter, 
and  the  notes  and  bonds  secured  thereby,  and  mortgage  participation 
certificates,  mortgage  guarantys  and  entire  mortgage  guarantys,  as  de- 
fined by  section  4r>:]/)/>.  shall  be  legal  investments  for  all  trust  funds  held 
by  any  executor,  administrator,  guardian,  trustee  or  other  person  holding 
trust  funds  for  investment,  and  for  the  funds  of  insurance  companies, 
hanks,  banking  institutions  and  trust  companies,  and  all  premiums  paid 
en  such  guarantys  and  certificates  may  be  charged  to  or  paid  out  of  the 
income  from  such  notes  or  bonds;  provided,  however,  that  if  any  such 
investment  be  in  a  mortgage  participation  certificate  or  certificates,  the 
mortgage  or  mortgages  and  deed  or  deeds  of  trust  referred  to  in  such 
certificates,  together  with  the  note  or  notes  and  bond  or  bonds  secured  by 
the  same,  shall  he  assigned  to  a  trust  company  organized  and  doing  busi- 
ness under  the  laws  of  this  state,  and  shall  be  held  by  such  trust  company 
as  security  for  the  payment  of  said  mortgage  participation  certificates, 
including  all  of  the  mortgage  participation  certificates  secured  by  such 
mortgages  and  deeds  of  trust  so  assigned,  and  for  the  performance  of  all 
of  the  conditions  of  said  mortgage  participation  certificates  imposed 
thereby  upon  the  mortgage  insurance  company  issuing  the  same;  and 
such  trust  company  shall  certify  on  each  such  mortgage  participation 
certificate,  the  the  aggregate  amount  of  the  certificates  issued,  eviden- 
cing and  conferring  participation  in  such  mortgages  and  deeds  of  trust 
and  in  the  notes  and  bonds  secured  thereby,  does  not  exceed  the  prin- 
cipal of  the  debts  evidenced  and  secured  by  such  mortgages  and  deeds 
of  trust;  and  provided,  also,  that  such  investment  shall  be  accompanied 


68  INSURANCE    LAWS   OF    CALIFORNIA. 

by  a  copy  of  the  appraisement  and  of  the  certificate  of  the  directors 
filed  or  to  be  filed  with  the  insurance  commissioner  as  required  by  the 
provisions  of  this  chapter. 

Stats.  1913,  p.  480. 

Sec.  453/*/".  No  corporation  shall  make  any  insurance  contract  or 
issue  any  policy  of  mortgage  insurance,  or  engage  in  the  business  of  a 
mortgage  insurance  company  until  it  has  obtained  from  the  insurance 
commissioner  his  certificate  that  such  company  has  complied  with  the 
provisions  of  this  chapter  and  is  duly  authorized  to  do  business  as  such 
mortgage  insurance  company ;  provided,  that  any  corporation  heretofore 
organized  under  the  laws  of  this  state  for  the  purpose  of  guaranteeing 
the  payment  of  mortgages  shall  have  the  right  to  transact  business  as  a 
mortgage  insurance  company  until  the  first  day  of  January^  A.  D.  1914 ; 
provided,  also,  that  the  failure  of  such  company  to  obtain  the  certificate 
of  the  insurance  commissioner  required  by  the  terms  of  this  act  on  or 
before  said  date  shall  terminate  such  right  to  transact  such  business 
until  such  certificate  shall  be  obtained. 

Stats.  1913,  p.  480. 

Sec.  453##.  A  mortgage  insurance  company  may  invest  its  capital 
and  accumulations  in  the  following  named  securities : 

1.  In  the  purchase  of,  or  loans  upon  interest-bearing  bonds  of  the 
United  States,  or  those  for  which  the  faith  and  credit  of  the  United 
States  are  pledged  for  the  payment  of  principal  and  interest. 

2.  In  the  purchase  of,  or  loans  upon  interest-bearing  bonds  of  any  of 
the  states  of  the  United  States  not  in  default  for  interest  on  such  bonds, 
including  bonds  of  this  state,  or  those  for  which  the  faith  and  credit  of 
the  State  of  California  are  pledged  for  the  payment  of  principal  and 
interest. 

3.  In  the  purchase  of,  or  loans  upon  interest-bearing  bonds  of  any  of 
the  counties  and  incorporated  cities  and  towns,  and  duly  organized 
school  districts  of  any  state  or  territory  of  the  United  States  not  in 
default  for  interest  on  such  bonds. 

4.  In  the  purchase  of,  or  loans  upon  interest-bearing  bonds  of  irriga- 
tion districts  as  provided  or  authorized  by  section  8  of  an  act  entitled 
"An  act  relating  to  bonds  of  irrigation  districts,  providing  under  what 
circumstances  such  bonds  may  be  made  legal  investments  for  the  funds 
of  banks,  banking  associations,  trust  companies,  insurance  companies, 
and  for  the  state  school  funds  and  trust  funds,  and  providing  for  the 
deposit  of  such  bonds  as  security  for  public  moneys,  and  providing  for 
a  commission  for  approving  certain  bonds  of  irrigation  districts,  for  a 
report  thereon,  for  the  filing  of  such  report,  for  a  certificate  of  the  state 
controller,  and  for  the  recording  of  such  bonds  in  the  office  of  the  state 
controller,"  approved  December  18,  1911. 

5.  In  loans  secured  by  mortgage  or  deed  of  trust  upon  unincumbered 
real  estate,  improved  or  unimproved,  or  in  the  purchase  of,  or  loans  upon 
notes  or  bonds  so  secured;  provided,  that  the  principal  so  loaned,  or  the 
entire  note  or  bond  issue  under  such  mortgage  or  deed  of  trust  shall  not 
exceed  sixty  per  centum  of  the  market  value  of  such  real  estate  with 
improvements  taken  as  security;  and  provided,  further,  in  case  said  loan 
is  made,  or  said  note  or  bond  issue  created  for  a  building  loan  on  real 
estate,  that  at  no  time  shall  the  principal  so  loaned,  or  the  entire  note  or 
bond  issue,  exceed  sixty  per  centum  of  the  market  value  of  the  real  estate 


MORTGAGE   INSURANCE.  69 

and  the  actual  cost  of  the  improvements  thereon  taken  as  security.  No 
mortgage  insurance  company  shall  invest  in,  hold  or  own  any  of  the 
capital  stock  of  any  other  corporation,  ncr  make  any  loan,  in  whole  or 
in  part,  on  the  security  of  the  capital  stock  of  any  other  corporation. 

Slats.  1913.  p.  481.* 

Sec.  453/t/i.  Every  mortgage  insurance  company  shall  make  a  report 
in  writing  to  the  insurance  commissioner,  which  report  shall  be  made 
quarterly,  and  shall  be  verified  by  the  oath  of  its  president  or  vice  presi- 
dent, and  its  secretary  or  treasurer  or  of  any  two  of  its  principal  officers. 
Such  report  shall  contain  a  statement  of  each  new  policy  of  mortgage 
insurance  issued  by  such  company  since  the  last  preceding  report,  stat- 
ing specifically  whether  such  policy  relates  to  an  entire  mortgage  guar- 
anty, or  to  a  mortgage  participation  certificate  or  certificates. 

When  such  policy  relates  to  an  entire  mortgage  guaranty,  such  report 
shall  specify  separately  the  following  facts  regarding  the  loan  on  which 
the  guaranty  is  based,  and  regarding  the  security  therefor,  namely : 

1.  The  aggregate  amount  of  principal  loaned. 

2.  A  description  of  the  property  securing  the  loan. 

3.  Separately,  the  market  value  of  the  land  and  the  market  value  of 
the  improvements  thereon,  if  any,  as  shown  by  the  appraisement  pro- 
vided for  by  the  terms  of  this  section,  and  the  aggregate  value  of  such 
land  and  improvements. 

4.  The  book  and  page  of  the  record  of  the  mortgage  or  mortgages, 
and  deed  or  deeds  of  trust  securing  the  loan. 

When  such  policy  relates  to  a  mortgage  participation  certificate  or 
certificates,  such  report  shall  specify  separately  in  connection  with  each 
such  certificate,  the  following  facts  regarding  the  loan  or  loans  on  which 
the  participation  certificate  or  certificates  are  based,  and  regarding  the 
security  or  securities  therefor,  namely: 

1.  The  aggregate  amount  of  principal  loaned  evidenced  by  the  note 
or  notes,  or  bond  or  bonds  secured  by  the  mortgage  or  mortgages,  or  deed 
or  deeds  of  trust  referred  to  in  such  certificate  or  certificates,  and  consti- 
tuting the  security  on  which  such  mortgage  participation  certificate  or 
certificates  are  based,  and,  separately,  the  amount  of  principal  secured 
by  each  such  mortgage  or  deed  of  trust. 

2.  A  description  of  the  property  securing  the  loan  under  each  such 
security. 

3.  Separately,  the  market  value  of  the  land  and  the  market  value  of 
the  improvements  thereon,  if  any,  securing  the  loan  under  each  such 
security,  as  shown  by  the  appraisement  provided  for  by  the  terms  of  this 
section,  and  the  aggregate  ^nhie  of  such  land  and  improvements. 

4.  The  book  and  page  of  the  record  of  each  such  mortgage  or  deed  of 
trust  ('(instituting  such  security. 

5.  The  aggregate  amount  of  such  participation  certificates  issued 
againsi  the  mortgage  or  mortgages,  or  deed  or  deeds  of  trust  forming  the 
security  for  such  participation  certificate. 

There  shall  be  filed  with  such  report  an  appraisement  of  each  separate 
parcel  of  property  taken  as  security  as  mentioned  in  such  report  as  above 
required,  which  appraisement  shall  be  made  by  a  person  or  corporation 
approved  by  the  insurance  commissioner.  In  such  appraisement  the 
market  value  of  each  parcel  of  land  and  of  the  improvements  thereon,  if 


70  INSURANCE   LAWS   OF    CALIFORNIA. 

any.  and  the  aggregate  value  of  such  parcel  of  land  and  improvements 
shall  be  stated,  together  with  a  general  statement  of  the  character  of  such 
land  and  of  the  kind  and  condition  of  such  improvements,  if  any. 

Such  appraisement  shall  be  signed  and  verified  by  such  appraiser,  or 
by  an  officer  of  the  corporation  making  such  appraisement,  and  shall  be 
accompanied  by  a  certificate  signed  and  verified  by  at  least  three  direc- 
tors of  such  mortgage  insurance  company  to  the  effect  that  in  the  opinion 
of  the  affiants,  and  each  of  them,  such  appraisement  is  correct,  and  that 
in  their  opinion  the  amount  thereof  does  not  exceed  the  market  value  of 
the  property,  and  that  the  principal  amount  loaned  on  the  security  of 
such  property  does  not  in  their  opinion  exceed  sixty  per  centum  of  the 
market  value  of  such  property  and,  also,  to  the  effect  that  said  company 
has  in  its  possession  or  control  evidences  of  title  consisting  of  either  a 
full  abstract  of  title,  a  full  certificate  or  guaranty  of  title,  or  a  policy  of 
title  insurance,  showing  that  the  mortgage  or  deed  of  trust  securing 
such  loan  is  a  first  lien  upon  a  marketable  title  in  fee  to  the  property 
covered  thereby. 

In  case  of  the  neglect  or  failure  of  any  such  mortgage  insurance  com- 
pany to  make  any  such  quarterly  report  as  herein  provided,  such  com- 
pany shall  be  liable  therefor,  and  shall  forfeit  to  the  State  of  California 
ten  dollars  per  day  for  every  day  during  which  such  neglect  or  failure 
continues;  provided,  however,  that  the  insurance  commissioner  shall 
have  the  authority  to  extend  the  time  within  which  any  such  report  may 
be  filed  for  not  exceeding  a  period  of  ten  days. 

Stats.  1913,  p.  482. 


DIVISION  III.     PART  IV.     TITLE  XI. 

INSURANCE. 

Chapter  I.  Insurance  in  General.     Articles  I-X1I.     Sees.  2527-2649. 

II.  Marine  Insurance.    Articles  I-IX.    Sees.  2<>.">-274<i. 

III.  Fire    Insurance.      Sees.   27r>2-27.">7. 

IV.  Life  and  Health  Insurance.     Sees.  27(>2-27t><>. 


CHAPTER  I. 

INSURANCE  IN  GENERAL. 

Article  I.  Definition  of  Insurance.     Sec.  2~)27. 

II.  What  may  be  Insured.     Sees.  2531-2534. 

III.  Parties  to  the  Contract.     Sees.  2538-2542. 

IV.  Insurable  Interest.     Sees.  2."V4(;-2.">S. 

V.  Concealment  and  Representations.     Sees.  2561-2583. 

VI.  The  Policy.     Sees.  2586-2599. 

VII.  Warranties.     Sees.  2603-2612. 

VIII.  Premium.     Sees.  2616-2622. 

IX.  Loss.     Sees.  2<>2l>-2<>2<>. 

X.  Xotice  of  Doss.     Strs.  2<>33-2<;:57. 

XI.  Double  Insurance.     Sees.  2041-2042. 

XII.  Reinsurance.     Sees.  2(54C>-2(>4!>. 


INSURANCE    IN    GENERAL DEFINITION.  71 

ARTICLE  I. 

DEFINITION  OF  INSURANCE. 

Six  .  2.127.     Insurance,  what. 
Insurance,  what. 

Sec.  2527.  Insurance  is  a  contract  whereby  one  undertakes  to  indem- 
nify another  against  loss,  damage,  or  liability,  arising  from  an  unknown 
or  contingent  event. 

Enacted  March  21,  1872. 

The  general  rule  is  that  a  policy,  if  delivered,  takes  effect  from  its  date,  unless  it 
be  otherwise  stated,  or  unless  there  is  evidence  of  a  contrary  intent.  If  the  premium 
be  paid  and  the  policy  he  not  delivered  till  afterward,  the  policy  takes  effect  by  rela- 
tion as  of  its  date,  even  though  a  loss  intervenes.  (  Union  Ins.  Co.  vs.  American  F.  I. 
Co.,  107  Cal.  329.) 

To  the  same  effect   is  Crawford  vs.  Tranxatlu ntic,  etc.,  Co.,  125  Cal.  609. 

A  beneficiary  certificate  of  a  fraternal  association,  being  a  contract  of  insurance, 
can  not  be  impaired  in  its  obligation  by  either  party  without  the  assent  of  the  other, 
and  an  enactment  by  the  association  passed  subsequent  to  the  issuance  of  such  a  cer- 
tificate, reducing  the  amount  payable  on  outstanding  certificates,  is  not  a  regulation 
for  the  government  of  the  association,  but  an  attempt  to  repudiate  its  obligation 
under  its  contract.     (  Bornttein  vs.  District  (hand  Lodge  No.  ),  2  Cal.  App.  624,  629.) 

I  1  i  lis  Judicial  Definition. — "Contract  with  party  to  secure  him  against 
apprehended  loss  on  account  of  his  interest  in  particular  subject-matter,  and  not  at 
all  incidental  to  or  transferable  with  the  subject-matter."  (Davis  vs.  Phoenix  Ins.  Co., 
111  Cal.  dot).  415,  43  Pac.  Rep.  1115.) 

(2)  As  to  Definition  and  Nature  or  Insurance. — Insurance  is  a  contract  by 
which  the  one  party,  in  consideration  of  a  price  paid  to  him  adequate  to  the  risk, 
becomes  security  to  the  other  that  he  shall  not  suffer  loss,  prejudice  or  damage  by 
the  happening  of  the  perils  specified  to  certain  things  which  may  be  exposed  to  them. 
The  principal  ingredients  of  such  a  contract  are  the  consideration,  the  risk  and  the 
indemnity.  The  consideration  is  the  premium  for  the  insurer's  undertaking;  the  risk 
may  be  said  to  be  the  perils  or  contingencies  against  which  the  assured  is  protected; 
and  the  indemnity  is  the  stipulated  desideratum  to  be  paid  to  the  assured  in  case  he 
has  suffered  hiss  or  damage  through  the  perils  and  contingencies  specified.  (l'lii/si- 
ci<nis'  Defense  Co.  vs.  Cooper  (C.  C.  A..),  1!>'.>  Fed.  576,  579.) 

As  to  what  is  an  "insurance  company"  or  "contract  of  insurance."  see  note  Ann. 
Cms.    1!>12d.    1026. 

As  to  what  is  an  unsurable  interest  in  propertv,  see  notes,  7  Am.  Dec.  42;  20  Am. 
Dec.  510. 

As  to  when  a  contract  of  insurance  is  complete,  see  note,  69  Am.  St.  Rep.  143. 

As  to  delivery  and  acceptance  of  policy,  see  note,  140  Am.  St.  Rep.  346. 

As  to  the  divisibility  of  insurance  contracts,  see  note,  Ann.  Cas.  1912c,  989. 

As  to  conditions  on  the  back  of  the  policy  as  forming  part  of  the  contract,  see  note, 
Ann.  Cas.  1912b,  7<U. 

(3)  Accident  Insurance — Evidence  as  to  Cause  of  Death. — In  an  action 
on  an  accident  insurance  policy,  evidence  held  sufficient  to  require  a  submission  of 
the  facts  to  the  jury  to  determine  wdiat  weight  should  be  given  them  as  to  proving 
whether  or  not  the  death  of  the  insured  was  due  to  an  accident.  ( McHicen  vs. 
Occidental  Life  Ins.  Co.  (Cal.  App.),  121)  Pac.  598.) 

As  to  meaning  of  "public  highway,"  as  used  in  accident  insurance,  see  note,  Ann. 
('as.  L912c,  607. 

As  to  voluntary  exposure  to  danger,  see  note,  139  Am.  St.  Rep.  <)9(.>. 

(4)  CONTRACT  ok  Indemnity — Liability  Under. — An  insurance  policy  is  a  con- 
tract of  indemnity  against  loss,  and  except  in  the  case  of  valued  insurance,  the  insured 
is  entitled  to  recover  only  for  the  loss  actually  sustained,  not  exceeding  the  sum 
stipulated.    (Whitney  Estate  Co.  vs.  Northern  Assur.  Co.,  155  Cal.  524, 101  Pac.  911.) 

(5)  Forfeiture  for  Nonpayment  of  Premiums. — A  provision  in  a  policy  of 
life  insurance,  agreeing  to  pay  upon  the  death  of  the  insured,  to  the  beneficiary 
darned,  the  amount  of  the  policy,  "less  all  indebtedness  to  the  company  on  this  policy, 
together  with  any  unpaid  premium  or  portion  of  the  premium  for  the  then  current 
year,"  can  only  apply  to  such  unpaid  premium  or  part  thereof  as  was  not  due  at  the 
time  of  the  death,  or  an  extension  of  the  time  for  payment  which  had  not  then 
expired:  and  must  be  held  inapplicable  to  the  deduction  of  any  overdue  premium  for- 
feiting the  policy  as  such,  "except  as  herein  provided,"  which  exception  has  no 
reference  to  any  overdue  premium.     (Burton  vs.  Columbian  Nat.  Life  Ins.  Co.,  20 

Cal.  App.  21,   127  Pac.    1087.) 


72  INSURANCE   LAWS   OF    CALIFORNIA. 

(6)  Same — Construction  of  Exception  to  Forfeiture  Clause. — The  excep- 
tion to  the  forfeiture  clause,  "except  as  herein  provided,"  refers  only  to  an  ensuing 
provision  in  the  policy,  that  after  premiums  have  been  paid  for  the  period  of  three 
years,  the  insured  may  avail  himself  of  specified  options.  But  since  in  fact  only  one 
year's  premiums  had  been  paid,  and  the  insurance  policy  was  forfeited  for  nonpay- 
ment of  the  second  premium  when  due,  the  forfeiture  therefor  was  as  absolute  as 
if  the  words  of  exception  had  not  been  contained  therein,  and  they  must  be  disre- 
garded in  that  case.  (Burton  vs.  Columbian  Nat.  Life  Ins.  Co.,  20  Cal.  App.  21, 
127  Pac.  1037.) 

(7)  A  life  insurance  company  can  not  be  expected  or  required  to  base  its  business 
on  credit  for  overdue  premiums  unpaid,  looking  to  itself  alone  for  their  payment  by 
deduction  from  the  policy  in  case  of  death.  Forfeiture  for  nonpayment  is  a  neces- 
sary means  of  protecting  the  company  from  embarrassment.  Nonpayment  at  the 
time  specified,  if  such  be  the  terms  of  the  contract,  involves  a  forfeiture.  A  con- 
struction of  the  policy  is  to  be  rejected,  which  would  involve  notice  to  policyholders 
that  they  incur  no  risk  by  defaulting  payment  of  an  annual  premium  for  the  oeriod 
of  one  year.  (Burton  vs.  Columbian  Nat.  Life  Ins.  Co.,  20  Cal.  App.  21,  127  Pac. 
1037.) 

(8)  Indemnity  Insurance — Duty  to  Examine  Books. — Where  a  bond  indem- 
nifying a  corporation  against  the  personal  dishonesty  or  culpable  negligence  of  its 
treasurer  contains  a  condition  that  the  corporation  shall  take  and  use  all  necessary 
steps  and  precautions  to  prevent  any  act  or  omission  on  the  part  of  such  employee 
which  would  tend  to  make  the  insurance  company  liable  for  any  loss,  such  condition 
does  not  require  the  plaintiff  corporation  to  examine  the  books  of  a  bank  in  which 
such  treasurer  has  deposited  plaintiff's  funds,  knowing  that  such  bank  was  insolvent. 
(National  Surety  Co.  vs.  Western  Pac.  R.  Co.  (C.  C.  A.),  200  Fed.  675,  680.) 

(9)  Same — Renewal  Bond — Failure  to  Incorporate  Conditions. — Where  an 
insurance  company  issued  to  the  plaintiff  bank  an  indemnity  bond,  whereby  it  agreed 
to  make  good  and  reimburse  the  plaintiff  for  all  pecuniary  loss  sustained  by  such  bank 
by  or  through  the  personal  dishonesty  or  culpable  negligence  of  the  treasurer  of  the 
plaintiff  corporation,  which  bond  was  afterward  extended  and  then  renewed  for  a 
year,  a  condition  in  the  application  or  "employer's  statement"  for  the  original  bond 
that  such  treasurer  could  sign  checks  or  drafts  on  bank  accounts  only  with  the 
counter-signature  of  the  secretary  of  the  plaintiff  corporation,  to  which  no  reference 
was  made  in  the  extension  certificate  or  the  renewal  bond,  will  not  be  considered  as 
incorporated  therein,  or  binding  on  the  plaintiff  corporation,  since,  by  section  2605  of 
the  Civil  Code  of  California,  any  statement  which  is  to  be  incorporated  in  a  policy 
of  insurance  must  be  referred  to  in  the  policy.  (National  Surety  Co.  vs.  Western 
Pac.  Ry.  Co.  (C.  C.  A.),  200  Fed.  675.) 

(10)  Insured  Building  on  Leased  Premises  —  Insurable  Interest  of 
Lessee. — Where  a  building  is  erected  on  leased  ground,  and  the  lease  contains  no 
privilege  of  renewal,  and  it  is  further  provided  that  at  the  expiration  of  the  lease 
such  building  was  to  revert  to  and  become  the  property  of  the  lessor,  the  insurable 
interest  of  the  lessee  in  the  building,  which  was  destroyed  by  fire  before  the  expira- 
tion of  the  lease,  will  be  determined  not  by  the  face  value  of  the  policy,  but  by  the 
value  of  the  interest  of  the  insured.  It  has  been  said  with  regard  to  such  cases  that 
it  is  not  the  house  but  the  interest  of  the  owner  therein  that  is  insured.  (Sievcrs 
vs.  Union  Assur.  Soc.  of  London,  20  Cal.  App.  250,  128  Pac.  771.) 

(11)  License  Tax — To  Whom  Applicable. — A  corporation  offering  to  the 
medical  profession  a  contract  whereby  for  a  stipulated  annual  premium  such  corpora- 
tion guarantees  to  defend  within  certain  limits  any  suit  for  damages  against  any 
physician  paying  such  amount,  which  suit  charges  the  physician  with  civil  malprac- 
tice, is  to  be  considered  as  engaged  in  the  insurance  business  within  the  Civil  Code 
of  California,  sections  2527,  2531,  2532,  2534,  so  that  such  corporation  must,  as  a 
condition  precedent  to  the  right  to  pursue  such  business,  complv  with  the  insurance 
laws.     (Physicians'  Defense  Co.  vs.  Cooper  (C.  C.  A.),  199  Fed.' 576.) 

(12)  Non-waiver  Agreement  signed  by  the  insured  can  not  have  the  effect  to 
waive  subsequent  acts  upon  which  he  relied  for  waiver  of  the  requirement  of  proofs 
of  loss,  not  included  in  its  terms.  (Bank  of  Anderson  vs.  Home  Ins.  Co.,  14  Cal. 
App.  224.  Ill  Pac.  507.) 

See  note  to  Sec.  2753,  post. 

(13)  Must  be  specially  pleaded  when  relied  upon  as  a  foundation  for  his  cause 
of  action ;  but  if  the  necessary  statement  appears  in  the  complaint,  though  by  impli- 
cation, it  is  sufficient.  (Bank  of  Anderson  vs.  Home  Ins.  Co.,  14  Cal.  App.  213,  111 
Pac.  507.) 

(14)  Notwithstanding  the  unequivocal  and  exacting  terms  of  the  policy  that  its 
conditions  or  provisions  can  not  be  waived  except  by  written  endorsement  of  such 
waiver  on  the  policy,  it  is  well  settled  that  the  insurer  may  be  bound  by  a  waiver  by 
the  general  agent  though  not  endorsed  on  the  policy.  (Bank  of  Anderson  vs.  Home 
Ins.  Co.,  14  Cal.  App.  213,  111  Pac.  507.) 


INSURANCE    IN    GENERAL — WHAT    INSURED.  73 

(15)  Same — Waiver  of  Proof  of  Loss. — A  provision  in  a  policy  requiring 
proofs  of  loss  within  a  specified  time  is  waived  where  the  adjuster,  within  the  time 
limited,  states  to  the  insured  that  such  proofs  were  unnecessary,  and  that  he  would 
adjust  the  loss  without  them  and  the  insured  failed  to  make  proofs  because  of  such 
statements,  and  the  company  made  no  denial  of  liability  until  after  the  time  had 
expired.     (McCuUougn  vs.  Home  Ins.  Co.,  155  Cal.  663,  102  Pac.  814.) 

See  pars.  4  and  5  of  note  to  Sees.  2753,  2754,  Civil  Code  part,  post. 

(16)  Notice  of  Loss — Promptness. — In  a  contract  whereby  an  insurance  com- 
pany agrees  to  indemnify  a  corporation  for  loss  sustained  through  the  personal  dis- 
honesty or  culpable  negligence  of  its  treasurer,  "immediate  notice"  of  any  loss  thus 
occasioned  means  no  more  than  that  degree  of  promptitude  which  is  reasonable  under 
the  circumstances.  (National  Surety  Co.  vs.  Western  Pac.  R.  Co.  (C.  C.  A.),  200 
Fed.  675,  581.) 

(17)  Same — Failure  to  Allege  Injury  by  Lack  of  Notice. — In  an  action  on 
a  policy  of  fire  insurance,  an  answer  which  sets  up  the  alleged  violation  of  a  promise 
made  by  plaintiff  not  to  adjust  any  loss  without  first  giving  notice  thereof  to  defend- 
ant, but  which  fails  to  show  that  defendant  was  in  any  way  injured  by  such  failure 
to  notify  defendant  of  the  adjustment  is  insufficient.  (Royal  Ins.  Co.  vs.  Caledonian 
Ins.  Co.  (Cal.  App.),  129  Pac.  597,  598.) 

(18)  Reinsurance — Liability  of  Reinsurer. — Where  a  policy  of  insurance 
contained  a  clause  that  "if  a  building  or  any  part  thereof  fall,  except  as  the  result 
of  fire,  all  insurance  by  this  policy  shall  immediately  cease,"  and  a  policy  of  reinsur- 
ance contained  the  identical  clause  and  also  the  following:  "This  policy  is  subject 
to  the  same  risks,  valuations,  conditions,  and  adjustments  as  are  or  may  be  taken  by 
the  reinsure!,  and  the  loss,  if  any  thereunder,  is  payable  pro  rata  with  the  reinsured 
and  at  the  same  time  and  place,"  the  fact  that  the  original  insurer  paid  for  damage 
caused  by  the  fall  of  a  wall  prior  to  the  fire  would  not  render  the  reinsurer  liable 
for  its  pro  rata  amount  under  the  policy.  (Royal  Ins.  Co.  vs.  Caledonian  Ins.  Co., 
20  Cal.  App.  504,  129  Pac.  597.) 

(19)  RIGHT  to  Share  in  Insurance  Money. — Where  a  house  in  course  of  con- 
struction was  destroyed  by  fire,  the  fact  that  the  contractor  failed  to  protect  himself 
from  loss  by  insurance,  does  not  entitle  him  to  share  in  the  insurance  money  received 
by  the  owner.     (Anderson  vs.  Quick,  163  Gal.  658,  126  Pac.  871.) 

As  to  who  are  entitled,  as  heirs,  to  proceeds,  see  note,  44  Am.  St.  Rep.  404. 

(20)  Who  Entitled  to  Insubance  Money— Executrix. — Where  certain  prop- 
erty  bequeathed  to  the  executrix  and  by  her  insured  is,  after  such  insurance,  destroyed 
by  fire,  the  Insurance  money  takes  the  place  of  the  personal  property  destroyed,  and 
passes  to  the  executrix.     (Estate  of  Roll.,  163  Cal.  801.  127  Pac.  55.) 


ARTICLE  IT. 
WHAT  MAY  BE  INSURED. 

Sec.  2531.  What  events  may  be  insured  against. 

25.^2.  Insurance  of  lottery  or  lottery  prize  unauthorized. 

2533.  Usual  kinds  of  insurance. 

2534.  All  subject  to  this  chapter. 

What  events  may  be  insured  against. 

Sec.  2531.  Any  contingent  or  unknown  event,  whether  past  or 
future,  which  may  damnify  a  person  having  an  insurable  interest,  or 
create  a  liability  against  turn,  may  be  insured  against,  subject  to  the 
provisions  of  this  chapter. 

Enacted  March  21,  1872. 

See  note  to  section  2527,  ante. 

Insurance  of  lottery  or  lottery  prize  unauthorized. 

Sec.  2532.  The  preceding  section  does  not  authorize  an  insurance  for 
or  against  the  drawing  of  any  lottery,  or  for  or  against  any  chance  or 
ticket  in  a  lottery  drawing  a  prize. 

Enacted  March  21,  1872. 


74  INSURANCE    LAWS   OP    CALIFORNIA. 

Usual  kinds  of  insurance. 

Sec.  2533.     The  most  usual  kinds  of  insurance  are : 

(1)  Marine  insurance; 

(2)  Fire  insurance; 

(3)  Life  insurance ; 

(4)  Health  insurance;  and, 

(5)  Accident  insurance. 
Enacted  March  21,  1872. 

All  subject  to  this  chapter. 

Sec.  2534.     All  kinds  of  insurance  are  subject  to  the  provisions  of 
this  chapter. 

Enacted  March  21,  1872. 


ARTICLE  III. 
PARTIES  TO  THE  CONTRACT. 

Sec.  2538.  Designation  of  parties. 

2539.  Who  may  insure. 

2540.  Who  may  be  insured. 

2541.  Assignment  to  mortgagee  of  policy  on  thing  insured. 

2.">42.  New  contract  between   insurer  and  assignee. 

Designation  of  parties. 

Sec.  2538.  The  person  who  undertakes  to  indemnify  another  by  a 
contract  of  insurance  is  called  the  insurer,  and  the  person  indemnified  is 
called  the  insured. 

Enacted  March  21,  1872. 

Who  may  insure. 

Sec.  2539.  Any  one  capable  of  making  a  contract  may  be  an  insurer, 
subject  to  the  restrictions  imposed  by  special  statutes  upon  foreign  cor- 
porations, non-residents  and  others. 

Enacted  March  21,  1872. 

Who  may  be  insured. 

Sec.  2540.     Any  one  except  a  public  enemy  may  be  insured. 
Enacted  March  21,  1872. 

Assignment  to  mortgagee  of  policy  on  thing  insured. 

Sec.  2541.  Unless  the  policy  otherwise  provides,  where  a  mortgagor 
of  property  effects  insurance  in  his  own  name  providing  that  the  loss 
shall  be  payable  to  the  mortgagee,  or  assigns  a  policy  of  insurance  to  a 
mortgagee,  the  insurance  is  deemed  to  be  upon  the  interest  of  the  mort- 
gagor, who  does  not  cease  to  be  a  party  to  the  original  contract,  and  any 
act  of  his,  prior  to  the  loss,  which  would  otherwise  avoid  the  insurant-.', 
will  have  the  same  effect,  although  the  property  is  in  the  hands  of  the 
mortgagee,  but  any  act,  which,  under  the  contract  of  insurance,  is  to 
be  performed  by  the  mortgagor,  may  be  performed  by  the  mortgagee 
therein  named,  with  the  same  effect  as  if  it  had  been  performed  by  the 
mortgagor. 

Stats.  1909,  p.  914. 

Where  a  mortgagee  had  assigned  to  him  a  policy  of  insurance,  as  further  security 
for  the  mortgage  deht,  and  afterwards  on  foreclosure  proceedings  became  the  pur- 
chaser of  the  land  and  premises  on  which  the  mortgage  was  made  for  the  full  amount 


INSURANCE  IN  GENERAL INSURABLE  INTEREST.  75 

of  his  judgment  and  costs,  it  was  decided  that  when  the  entire  indebtedness  was  thus 
discharged  his  interest  in  the  policy  was  extinguished.  (Reynolds  vs.  London,  etc., 
Ins.  Co..  128  Cal.  16.) 

Where  mortgagor  made  fire  insurance  policy  payable  to  his  mortgagee,  as  her 
interest  may  appear,  and  policy  contained  provision  that  commencement  of  fore- 
closure proceedings  on  property  covered  would  render  policy  void,  it  was  held  that 
the  filing  of  a  complaint  in  foreclosure  did  not  defeat  right  to  recover  on  policy.  Dis- 
senting opinion,  however,  states  that  the  holding  of  the  majority  to  the  effect  that 
mortgagee  is  not  prejudiced  by  failure  of  insured  to  fulfill  the  conditions  of  his 
contract,  seems  to  nullify  the  express  provisions  of  section  2541,  Civil  Code.  (Sharp 
vs.  Scottish  Union,  etc. .'Co..  136  Cal.  542,  547.) 

Section  2541  of  the  Civil  Code  gives  the  rule  governing  the  effect  of  the  creation 
of  an  interest  in  a  mortgagee  or  creditor  where  the  policy  runs  to  the  mortgagor  or 
debtor,  and  does  not  apply  to  policies  which  themselves  provide  to  what  extent  its 
conditions  shall  apply  to  such  interest,  when  created.  In  an  action  to  recover  on  a 
fire  insurance  policy  by  a  creditor  whose  debt  was  secured  by  a  deed  of  trust  of  the 
property  insured  executed  after  the  issuance  of  the  policy  without  the  consent  of  the 
company,  by  virtue  of  the  mortgage  clause  in  the  body  of  the  policy  (being  the 
mortgage  clause  in  the  form  of  policy  known  as  the  "New  York  Standard  Form"), 
the  interest  of  the  mortgagee  was  free  from  all  conditions  expressed  in  the  body  of 
the  policy  not  expressly  made  applicable  at  the  time  of  creation  of  such  interest. 
(  Welch  vs.  British  American,  etc..  Co.,  14s  Cal.  223,  227.) 

In  GENERAL.— Except  in  case  of  a  valued  policy  the  insured  is  entitled  to  recover 
under  the  policv  onlv  such  loss  as  he  has  actually  sustained,  not  exceeding  the  sum 
stipulated.  {Whitney  Estate  Co.  vs.  Northern  Assur.  Co.,  155  Cal.  521,  524,  101 
Pac,  Ml.) 

I.xstHAUi.i:  Ixtkkkst  of  LESSEE — Reversion  of  BuiLDiNc.s. — Under  this  section 
and  sections  2551  and  2588,  a  tenant  erecting  a  building  on  the  leased  premises, 
though  the  lease  contained  no  privilege  of  renewal  and  provided  for  a  reversion  of 
the  buildings  to  the  lessor  at  the  end  of  the  lease,  has  an  insurable  interest  in  a 
building  erected  by  him.  during  the  life  of  the  lease,  and  if  the  building  is  destroyed 
before  the  end  of  the  term,  may  recover  the  value  of  his  interest  in  the  building,  but 
not  the  value  of  the  building.  (Sieveri  vs.  Union  Assur.  Society  of  London,  20  Cal. 
A  pp.  250,  128  Pac.  771.) 

New  contract  between  insurer  and  assignee. 

Sec.  2542.  If  an  insurer  assents  to  the  transfer  of  an  insurance  from 
a  mortgagor  to  a  mortgagee,  and,  at  the  time  of  his  assent,  imposes  fur- 
ther obligations  on  the  assignee,  making  a  new  contract  with  him,  the 
nets  of  the  mortgagor  can  not  affect  his  rights. 

Enacted  March  21,  1872. 


ARTICLE  IV. 
INSURABLE  INTEREST. 

Sec.  2546.  Insurable  interest,  what. 

2.~>47.  In  what  may  consist. 

2548.  Interest  of  carrier  or  depositary. 

2549.  Mere  expectancies. 

2550.  Measure  of  interest  in  property. 

2551.  Insurance  without   interest,  illegal. 

2552.  When  interest  must  exist. 

2553.  Effect  of  transfer. 

2554.  Transfer  after  loss. 

2555.'  Exception  in  the  case  of  several  subjects  in  one  policy. 

2556.  In  case  of  the  death  of  the  insured. 

2.">7.  In  case  of  transfer  between  co-tenants. 

2558.  Policy,   when  void. 

Insurable  interest,  what. 

Sec.  2546.     Every  interest   in   property,  or  any  relation  thereto,  or 
liability  in  reaped  thereof3  of  such  a  nature  thai  a  contemplated  peril 

niiuhl  directly  damnify  Hie  insured,  is  an  insurable  interest. 
Enacted  March  21,  1872. 

When-  nil    applicant    for   lire   insurance   in    the   sum   of  eight  hundred   dollars  had 
paid   the  consideration   for  the  insured  property  hut    had   taken   title  in  the  name  of 


76  INSURANCE   LAWS   OP   CALIFORNIA. 

another  as  security  for  a  loan  of  five  hundred  dollars,  and  asked  for  insurance  in  the 
name  of  the  creditor,  loss,  if  any,  to  be  paid  to  applicant  as  his  interest  might  appear, 
and  policy  was  issued  with  full  knowledge  of  the  facts,  applicant  and  owner  of  legal 
title  had  each  an  insurable  interest  in  the  property,  and  policy  was  construed  as 
intended  to  insure  interests  of  both.  (Loring  vs.  Dutchess  Ins.  Co.,  1  Cal.  Ann. 
186,  1S8.) 

See  note  to  section  2541,  ante. 

In  what  may  consist. 

Sec.  2547.     An  insurable  interest  in  property  may  consist  in: 

(1)  An  existing  interest; 

(2)  An  inchoate  interest  founded  on. an  existing  interest;  or 

(3)  An  expectancy,  coupled  with  an  existing  interest  in  that  out  of 
which  the  expectancy  arises. 

Enacted  March  21,  1872. 

Interest  of  carrier  or  depositary. 

Sec.  2548.  A  carrier  or  depositary  of  any  kind  has  an  insurable 
interest  in  a  thing  held  by  him  as  such,  to  the  extent  of  its  value. 

Enacted  March  21,  1872. 

Mere  expectancies. 

Sec.  2549.  A  mere  contingent  or  expectant  interest  in  anything,  not 
founded  on  an  actual  right  to  the  thing,  nor  upon  any  valid  contract  for 
it.  is  not  insurable. 

Enacted  March  21,  1872. 

Measure  of  interest  in  property. 

Sec.  2550.  The  measure  of  an  insurable  interest  in  property  is  the 
extent  to  which  the  insured  might  be  damnified  bv  lass  or  injury  thereof. 

Enacted  March  21,  1872. 

Whitney  Estate  Co.  vs.  Northern  Assur.  Co.,  155  Cal.  521,  524.  Also  Sievers  vs. 
Union  Assur.  Soe.,  20  Cal.  App.  250.     See  notes  to  section  2527,  ante. 

Insurance  without  interest,  illegal. 

Sec.  2551.  The  sole  object  of  insurance  is  the  indemnity  of  the 
insured,  and  if  he  has  no  insurable  interest  the  contract  is  void. 

Enacted  March  21,  1872. 

See  notes  to  sections  2527  and  2550. 
When  interest  must  exist. 

Sec.  2552.  An  interest  insured  must  exist  when  the  insurance  takes 
effect,  and  wrhen  the  loss  occurs,  but  need  not  exist  in  the  mean  time. 

Enacted  March  21.  1872. 

Effect  of  transfer. 

Sec.  2553.  Except  in  the  cases  specified  in  the  next  four  sections, 
and  in  the  cases  of  life,  accident,  and  health  insurance,  a  change  of 
interest  in  any  part  of  a  thing  insured,  unaccompanied  by  a  correspond- 
ing change  of  interest  in  the  insurance,  suspends  the  insurance  to  an 
equivalent  extent,  until  the  interest  in  the  thing  and  the  interest  in  the 
insurance  are  vested  in  the  same  person. 

Enacted  March  21,  1872. 

Transfer  after  loss. 

Sec.  2554.  A  change  of  interest  in  a  thing  insured,  after  the  occur- 
rence of  an  injury  which  results  in  a  loss,  does  not  affect  the  right  of  the 
insured  to  indemnity  for  the  loss. 

Enacted  March  21,  1872. 


INSURANCE   IN    GENERAL — CONCEALMENT   AND   REPRESENTATION.        77 

Exception  in  the  case  of  several  subjects  in  one  policy. 

Sec.  2555.  A  change  of  interest  in  one  or  more  of  several  distinct 
things,  separately  insured  by  one  policy,  does  not  avoid  the  insurance  as 
to  the  others. 

Enacted  March  21,  1872. 

In  case  of  the  death  of  the  insured. 

Sec.  2556.  A  change  of  interest,  by  will  or  succession,  on  the  death 
of  the  insured,  does  not  avoid  an  insurance ;  and  his  interest  in  the  insur- 
ance passes  to  the  person  taking  his  interest  in  the  thing  insured. 

Enacted  March  21,  1872. 

In  case  of  transfer  between  co-tenants. 

Sec.  2557.  A  transfer  of  interest  by  one  of  several  partners,  joint 
owners,  or  owners  in  common,  who  are  jointly  insured,  to  the  others, 
does  not  avoid  an  insurance,  even  though  it  has  been  agreed  that  the 
insurance  shall  cease  upon  an  alienation  of  the  thing  insured. 

Enacted  March  21,  1872. 

Policy,  when  void. 

Sec.  2558.  Every  stipulation  in  a  policy  of  insurance  for  the  pay- 
ment of  loss  whether  the  person  insured  has  or  has  not  any  interest  in 
the  property  insured,  or  that  the  policy  shall  be  received  as  proof  of 
such  interest,  and  every  policy  executed  by  way  of  gaming  or  wagering, 
is  void. 

Enacted,  Stats.  1873-4,  p.  255. 

Bee  notes  to  sections  2527,  2541,  and  2550,  ante. 

ARTICLE  V. 

CONCEALMENT  AND  REPRESENTATIONS. 

Si;<  .  2561.  Concealment,  what. 

2562.  K  fleet  of  concealment. 

2563.  What  must  be  disclosed. 

2564.  Matters  which  need  not  be  communicated  without  inquiry. 

2565.  Test  of  materiality. 

2566.  Matters  which  each  is  bound  to  know. 

2567.  Waiver  of  communication. 

2568.  Interest  of  insured. 

2569.  Fraudulent  warranty. 
2670.  Matters  of  opinion. 

2571.  Representation,  what. 

2572.  When  made. 

2573.  How  interpreted. 

-574.  Representation  as  to  future. 

2575.  How  may  affect  policy. 

2576.  When  may  be  withdrawn. 

2577.  Time  intended  by  representation. 

2578.  Representing  information. 

2579.  Falsity. 

2580.  Effect  of  falsity. 

2581.  Materiality. 

2582.  Application  of  provisions  of  this  article. 

2583.  Right  to  rescind. 

Concealment,  what. 

Sec.  2561.  A  neglect  to  communicate  that  which  a  party  knows,  and 
Ought  to  communicate,  is  called  a  concealment. 

Enacted  March  21,  1872. 

The  owner  of  a  cargo  of  wheat  which  was  shipped  on  a  barge,  and  which  was 
overdue,  received  information  that  a  barge  had  been  lost  that  morning,  and  imme- 


78  INSURANCE   LAWS    OF    CALIFORNIA. 

diately  effected  an  insurance  on  the  cargo,  without  communicating  his  knowledge  of 
(he  supposed  loss  to  the  insurer.  The  court  decided  the  same  to  be  a  fraudulent 
concealment.     (Hart  vs.  British  /'.  .1/.  Co.,  80  Cal.  440.) 

Effect  of  concealment. 

Sec.  2562.  A  concealment,  whether  intentional  or  unintentional,  en- 
titles the  injured  party  to  rescind  a  contract  of  insurance. 

Enacted  March  21,  1872. 

See  note  to  section  2501,  ante. 
What  must  be  disclosed. 

Sec.  2563.  Each  party  to  a  contract  of  insurance  must  communicate 
to  the  other,  in  good  faith,  all  facts  within  his  knowledge  which  are  or 
which  he  believes  to  be  material  to  the  contract,  and  which  the  other  has 
not  the  means  of  ascertaining,  and  as  to  which  he  makes  no  warranty. 

Enacted  March  21,  1872. 

See  note  to  section  2561,  ante. 
Matters  which  need  not  be  communicated  without  inquiry. 

Sec.  2564.  Neither  party  to  a  contract  of  insurance  is  bound  to  com- 
municate information  of  the  matters  following,  except  in  answer  to  the 
inquiries  of  the  other: 

1.  Those  which  the  other  knows; 

2.  Those  which,  in  the  exercise  of  ordinary  care,  the  other  ought  to 
know,  and  of  which  the  former  has  no  reason  to  suppose  him  ignorant; 

3.  Those  of  which  the  other  waives  communication ; 

4.  Those  which  prove  or  tend  to  prove  the  existence  of  a  risk  excluded 
by  a  warranty,  and  which  are  not  otherwise  material ;  and, 

5.  Those  which  relate  to  a  risk  excepted  from  the  policy,  and  which 
are  not  otherwise  material. 

Enacted  March  21,  1872. 

It  is  a  general  rule  that  when  a  stipulation  or  exception  to  a  policy  of  insurance 
emanating  from  the  insurer  is  capahle  of  two  meanings,  the  one  to  be  adopted  is 
that  which  is  most  favorable  to  the  insured.  (Bay ley  vs.  Employers'  L.  .1.  Corp., 
125  Cal.  345.) 

Test  of  materiality. 

Sec.  2565.  Materiality  is  to  be  determined  not  by  the  event;  but 
solely  by  the  probable  and  reasonable  influence  of  the  facts  upon  the 
party  to  whom  the  communication  is  due,  in  forming  his  estimate  of  the 
disadvantages  of  the  proposed  contract,  or  in  making  his  inquiries. 

Enacted  March  21,  1872. 
Matters  which  each  is  bound  to  know. 

Sec.  2566.  Each  party  to  a  contract  of  insurance  is  bound  to  know 
all  the  general  causes  which  are  open  to  his  inquiry,  equally  with  that 
of  the  other,  and  which  may  affect  either  the  political  or  material  perils 
contemplated ;  and  all  general  usages  of  trade. 

Enacted  March  21,  1872. 
Waiver  of  communication. 

Sec.  2567.  The  right  to  information  of  material  facts  may  be  waived, 
either  by  the  terms  of  insurance  or  by  neglect  to  make  inquiries  as  to 
such  facts,  where  they  are  distinctly  implied  in  other  facts  of  which 
information  is  communicated. 

Enacted  March  21,  1872. 


INSURANCE   IN    GENERAL CONCEALMENT    AND    REPRESENTATION.        79 

Interest  of  insured. 

Sec.  2568.  Information  of  the  nature  or  amount  of  the  interest  of 
one  insured  need  not  be  communicated  unless  in  answer  to  an  inquiry, 
except  as  prescribed  by  section  2587. 

Enacted  March  21,  1872. 

Fraudulent  warranty. 

Sec.  2569.  An  intentional  and  fraudulent  omission,  on  the  part  of 
one  insured,  to  communicate  information  of  matters  proving  or  tending 
to  prove  the  falsitv  of  a  warranty,  entitles  the  insurer  to  rescind. 

Enacted  March  21,  1872. 

Matters  of  opinion. 

Sec.  2570.  Neither  party  to  a  contract  of  insurance  is  bound  to  com- 
municate, even  upon  inquiry,  information  of  his  own  judgment  upon 
the  matters  in  question. 

Enacted  March  21,  1872. 

Representation,  what. 

Sec.  2571.     A  representation  may  be  oral  or  written. 
Enacted  March  21,  1872. 

Where  a  fire  insurance  policy  referred  to  a  si  rvey  of  the  insured  property  and 
made  it  a  part  of  the  policy,  the  fact  that  the  survey  was  not  made  at  or  hefore  the 
execution  of  the  policy  may  have  deprived  it  of  the  quality  of  an  express  warranty, 
hut  it  still  operated  as  evidence  of  representations  made  as  inducement  for  the  issu- 
ance of  the  policy,  and  as  such  was  proper  matter  to  j?o  to  the  jury.  (Rankin  vs. 
Amazon  Ins.  Co.,  25  Pac.  Rep.  280,  2<;i  ;  80  Cal,  206  on  rehearing.) 

When  made. 

Sec.  2572.  A  representation  may  be  made  at  the  same  time  with  issu- 
ing the  policy,  or  before  it. 

Enacted  March  21,  1872. 

See  note  to  section  2571,  ante. 

Cited,  Rankin  vs.  Amazon  /us.  Co..  25  Pac.  :2i;o,  281. 

How  interpreted. 

Sec.  2573.  The  language  of  a  representation  is  to  be  interpreted  by 
the  same  rules  as  the  language  of  contracts  in  general. 

Enacted  March  21,  1872. 

See  note  to  section  2571 ,  ante.     Also  2572,  ante. 
Representation  as  to  future. 

Sec.  2574.  A  representation  as  to  the  future  is  to  be  deemed  a 
promise,  unless  it  appears  that  it  was  merely  a  statement  of  belief  or 
expectation. 

Enacted  March  21,  1872. 

See  note  to  section  2571,  ante. 
How  may  affect  policy. 

Sec.  2575.  A  representation  can  not  be  allowed  to  qualify  an  express 
provision  in  a  contract  of  insurance;  but  it  may  qualify  an  implied 
warranty. 

Enacted  March  21,  1872. 

See  note  to  section  2571,  ante. 


80  INSURANCE    LAWS   OP    CALIFORNIA. 

When  may  be  withdrawn. 

Sec.  2576.  A  representation  may  be  altered  or  withdrawn  before  the 
insurance  is  effected,  but  not  afterwards. 

Enacted  March  21,  1872. 

Time  intended  by  representation. 

Sec.  2577.  The  completion  of  the  contract  of  insurance  is  the  time 
to  which  a  representation  must  be  presumed  to  refer. 

Enacted  March  21,  1872. 

See  note  to  section  2571,  ante. 
Representing  information. 

Sec.  2578.  When  a  person  insured  has  no  personal  knowledge  of  a 
fact,  he  may  nevertheless  repeat  information  which  he  has  upon  the 
subject,  and  which  he  believes  to  be  true,  with  the  explanation  that  he 
does  so  on  the  information  of  others,  or  he  may  submit  the  information, 
in  its  whole  extent,  to  the  insurer ;  and  in  neither  case  is  he  responsible 
for  its  truth,  unless  it  proceeds  from  an  agent  of  the  insured,  whose  duty 
it  is  to  give  the  intelligence. 
Falsity. 

Sec.  2579.  A  representation  is  to  be  deemed  false  when  the  facts  fail 
to  correspond  with  its  assertions  or  stipulations. 

Effect  of  falsity. 

Sec.  2580.  If  a  representation  is  false  in  a  material  point,  whether 
affirmative  or  promissory,  the  injured  party  is  entitled  to  rescind  the 
contract  from  the  time  when  the  representation  becomes  false. 

An  insured  is  not  entitled  to  sue  for  a  cancellation  of  his  policy  and  to  recover  a 
ratable  proportion  of  the  premium  paid,  without  a  provision  in  the  policy  to  that 
effect.  Sections  2G10,  2617  and  2619  construed.  (Joshua  Hcndy  M.  Works  vs.  Insur- 
ance Co.,  86  Cal.  248.) 

The  fact  that  a  survey  of  insured  premises  was  not  delivered  until  after  the  deliv- 
ery of  the  policy  to  the  insured,  where  it  was  referred  to  in  the  policy  and  made  a 
part  "thereof  in  express  terms,  did  not  justify  the  court  in  excluding  it  as  evidence. 
Sections  2583  and  2605  also  considered.  Where  the  policy  provided  that  a  watchman 
was  to  be  employed  about  the  premises  day  and  night  and  the  person  employed  did  not 
watch  the  premises  at  night  but  slept  in  a  building  about  three  hundred  yards  from 
the  premises,  the  warranty  was  not  kept.    (Rankin  vs.  Amazon  Ins.  Co.,  89  Cal.  203.) 

Materiality. 

Sec.  2581.  The  materiality  of  a  representation  is  determined  by  the 
same  rule  as  the  materiality  of  a  concealment. 

Enacted  March  21,  1872. 

Application  of  provisions  of  this  article. 

Sec.  2582.  The  provisions  of  this  article  apply  as  well  to  a  modifica- 
tion of  a  contract  of  insurance  as  to  its  original  formation. 

Enacted  March  21,  1872. 

Right  to  rescind. 

Sec.  2583.  Whenever  a  right  to  rescind  a  contract  of  insurance  is 
given  to  the  insurer  by  any  provision  of  this  chapter,  such  right  may  be 
exercised  at  any  time  previous  to  the  commencement  of  an  action  on  the 
contract. 

Enacted,  Stats.  1873-4,  p.  255. 

Rankin  vs.  Amazon  Ins.  Co.,  25  Pac.  Rep.  260.  261;  89  Cal.  203,  on  rehearing. 
See  note  to  section  2580,  ante. 


INSURANCE  IN  GENERAL — POLICY.  81 

ARTICLE  VI. 

THE  POLICY. 

Sec.  2586.  Policy,  what. 

2587.  What  must  be  specified  iu  a  policy. 

2588.  Whose  interest  is  covered. 

2589.  Insurance  by  agent  or  trustee. 

2590.  Insurance  by  part-owner. 

2591.  General  terms. 

2592.  Successive  owners. 

2593.  Transfer  of  the  thing  insured. 

2594.  Open  and  valued  policies. 

2595.  Open  policy,  what. 

2596.  Valued  policy,  what. 

2597.  Running  policy,  what. 

2598.  Effect  of  receipt. 

2590.     Agreement  not  to*  transfer. 

Policy,  what. 

Sec.  2586.  The  written  instrument,  in  which  a  contract  of  insurance 
is  set  forth,  is  called  a  policy  of  insurance. 

Enacted  March  21,  1872/ 

Provisions  in  an  insurance  policy  are  construed  so  as  to  prevent  a  forfeiture,  if 
the  language  will  reasonably  pcrmil  such  a  construction.  (O'Neill  vs.  Caledonian 
Ins.  Co.,  46  Cal.  Dec.  359,  L35  Pae.  1121.) 

In  an  action  upon  fire  insurance  policy  the  insurer  is  not  entitled  to  have  it 
reformed  on  the  ground  of  an  alleged  mutual  mistake  as  to  the  form  of  the  "rider" 

attached  thereto,  by  the  agents  of  the  insurer,  where  the  rider  is  in  the  same  form  as 
thai  attached  to  a  previous  policy,  and  the  insured  was  not  informed  of  any  change 
in  the  rule  as  to  the  form  of  such  "riders"  until  after  the  (ire.  (4(5  Cal.  Dec.  359, 
135  I'ac.  1121.) 

What  must  be  specified  in  a  policy. 

Sec.  2587.     A  policy  of  insurance  must  specify : 

1.  The  parties  between  whom  the  eontracl  is  made; 

2.  The  rate  of  premium ; 

3.  The  property  or  life  insured; 

4.  The  interest  of  the  insured  in  property  insured,  if  he  is  not  the 
absolute  owner  thereof ; 

5.  The  risks  insured  against;  and, 

6.  The  period  during  which  the  insurance  is  to  continue. 
Enacted  March  21,  1872. 

Where  a  contract  for  the  hiring  of  a  lighter  provided  for  the  payment  of  $3,500, 
after  loss,  it  was  held  to  be  a  contract  of  bailment  merely  and  not  insurance  within 
the  meaning  of  sections  2587  and  2506.  (Wilmington  Trans.  Co:  vs.  O'Neil,  .98 
Cal.   l.i 

The  rule  as  to  what  constitutes  a  policy  of  insurance,  and  also  when  the  risk  shall 
commence,  considered  and  stated.  See  note  to  section  2527.  (Union  Ins.  Co.  vs. 
American  In*.  Co.,  11*7  Cal.  329;  Crawford  vs.  Transatlantic,  etc.,  Co.,  125  Cal.  (509, 

to  same  effect.) 

Where  .in  application  for  insurance  stated  fully  that  the  applicant  held  the  prem- 
ises upon  which  was  situated  the  house  insured  (afterwards  destroyed  by  fire),  under 
a  contract  to  purchase  the  same,  while  the  policy  contained  a  proviso  to  the  effect 
that  if  the  assured  was  not  the  sole  and  unconditional  owner  in  fee  of  said  property, 
the  policy  should  be  null  and  void,  making,  however,  the  application  by  reference  part 
of  the  policy,  the  court  decided  that  the  proviso  in  the  policy  could  not  defeat  an 
action  brought  thereon.  The  court,  however,  reduced  the  amount  of  the  judgment  to 
the  sura  paid  on  the  purchase  price.     (Davis  vs.  Phc&nia  Ins.  Co.,  Ill  Cal.  409.) 

Where  a  policy  of  insurance  against  loss  by  fire  allows  the  premises  to  be  used 
as  an  "auto  repair  shop.*'  a  printed  condition  in  the  policy  that  the  insurer  shall  not 
be  liable  for  loss  occurring  while  more  than  one  quart  of  gasoline  is  used  or  kept  on 
the  premises,  does  not  exempt  from  liability  for  loss  from  a  fire  occurring  from  the 
ignition  of  several  gallons  of  gasoline  emptied  from  the  leaking  reservoir  of  an  auto 
mobile  brought  into  the  shop  for  repair. 


6     ii 


82  INSURANCE   LAWS   OP   CALIFORNIA. 

Under  a  clause  in  the  policy  forbidding  the  admission  into  the  insured  building  of 
any  gasoline  other  than  contained  in  the  tanks  of  machines  "permanently  or  tempo- 
rarily stabled  therein,"  the  policy  is  not  suspended  by  the  presence  on  the  premises 
at  the  time  of  the  fire  of  several  other  automobiles,  each  containing  more  than  one 
quart  of  gasoline  in  its  reservoir. 

Under  the  clause  in  the  policy  suspending  the  insurance  while  more  than  one 
quart  of  gasoline  is  kept  on  the  premises,  the  fact  that  at  divers  times  before  the  fire 
considerable  quantities  of  gasoline  have  been  kept  therein  in  addition  to  that  in  tanks 
of  machines  and  that  kept  for  use  in  repair  work,  does  not  avoid  the  policy,  if  no 
such  excess  is  on  hand  at  the  time  of  the  fire.  (O'Neill  vs.  Caledonian  Ins.  Co.,  4(5 
Cal.  Dec.  359,  135  Pac.  1121.) 

Whose  interest  is  covered. 

Sec.  2588.  When  the  name  of  the  person  intended  to  be  insured  is 
specified  in  a  policy,  it  can  be  applied  only  to  his  own  proper  interest. 

Enacted  March  21,  1872. 

Sicvcrs  vs.  Union  Assur.  Soc,  20  Cal.  App.  770,  771. 

Insurance  by  agent  or  trustee. 

Sec.  2589.  When  an  insurance,  is  made  by  an  agent  or  trustee,  the 
fact  that  his  principal  or  beneficiary  is  the  person  really  insured  may  be 
indicated  by  describing  him  as  agent  or  trustee,  or  by  other  general 
words  in  the  policy. 

Enacted  March  21,  1872. 

Insurance  by  part  owner. 

Sec.  2590.  To  render  an  insurance,  effected  by  one  partner  or  part 
owner,  applicable  to  the  interest  of  his  copartners,  or  of  other  part 
owners,  it  is  necessary  that  the  terms  of  the  policy  should  be  such  as  are 
applicable  to  the  joint  or  common  interest. 

Enacted  March  21,  1872. 

General  terms. 

Sec.  2591.  When  the  description  of  the  insured  in  a  policy  is  so 
general  that  it  may  comprehend  any  person  or  any  class  of  persons,  he 
only  can  claim  the  benefit  of  the  policy  who  can  show  that  it  was  in- 
tended to  include  him. 

Enacted  March  21,  1872. 

In  an  action  brought  to  recover  unpaid  premiums  on  several  policies  of  fire  insur- 
ance on  certain  buildings  which  were  part  of  the  estate  of  one  Samuel  Hancock, 
deceased,  said  estate  being  then  in  process  of  administration  and  the  administratrix 
and  the  defendant,  Robert  Hancock,  being  the  sole  heirs  of  said  deceased.  The  policies 
purported,  respectively,  to  insure  the  estate  of  Samuel  Hancock,  deceased,  against  loss 
on  the  several  buildings  described,  the  evidence  showing  that  the  defendant,  Robert 
Hancock,  had  procured  the  policies  to  be  issued,  but  neither  himself  nor  the  admin- 
istratrix was  named  personally  in  the  policies,  and  the  latter  repudiated  the  trans- 
action. There  was  a  verdict  and  judgment  for  plaintiff,  the  defendant  claiming  he 
should  not  be  held  personally  liable  for  the  premiums.  The  supreme  court  affirmed 
the  judgment,  holding  that  the  phrase  "Estate  of  Samuel  Hancock,  deceased,"  suffi- 
ciently covered  the  interest  of  the  defendant  in  the  property,  and  that  although  he 
had  no  authority  to  procure  insurance  for  the  administratrix,  yet  she  could  have  rati- 
fied his  act,  even  after  the  occurrence  of  a  loss.  -(Phoenix  Insurance  Co.  vs.  Hancock, 
123  Cal.  222.) 

Successive  owners. 

Sec.  2592.  A  policy  may  be  so  framed  that  it  will  inure  to  the  benefit 
of  whomsoever,  during  the  continuance  of  the  risk,  may  become  the 
owner  of  the  interest  insured. 

Enacted  March  21,  1872. 


INSURANCE  IN  GENERAL — POLICY.  83 

Transfer  of  the  thing  insured. 

Sec.  2593.  The  mere  transfer  of  a  thing  insured  does  not  transfer 
the  policy,  but  suspends  it  until  the  same  person  becomes  the  owner  of 
both  the  policy  and  the  thing  insured. 

Enacted  March  21,  1872, 

Open  and  valued  policies. 

Sec.  2594.     A  policy  is  either  open  or  valued. 
Enacted  March  21,  1872. 

Open  policy,  what. 

Sec.  2595.  An  open  policy  is  one  in  which  the  value  of  the  thing 
insured  is  not  agreed  upon,  but  is  left  to  be  ascertained  in  case  of  loss. 

Enacted  March  21,  1872. 

Valued  policy,  what. 

Sec.  2596.  A  valued  policy  is  one  which  expresses  on  its  face  an 
agreement  that  the  thing  insured  shall  be  valued  at  a  specified  sum. 

Enacted  March  21,  1872. 

Wilmington  T.  Co.  vs.  O'Neil,  98  Cal.  1,  7. 

See  note  to  section  2587,  ante. 

Whitney  Estate  Co.  vs.  Northern  Assur.  Co.',  155  Cal.  521,  524. 

See  note  to  section  2541,  ante. 

Running  policy,  what. 

Sec.  2597.  A  running  policy  is  one  which  contemplates  successive 
insurances,  and  which  provides  that  the  object  of  the  policy  may  be  from' 
time  to  time  defined,  especially  as  to  the  subjects  of  insurance,  by  addi- 
tional statements  or  indorsements. 

Enacted  March  21,  1872. 

Effect  of  receipt. 

Sec.  2598.  An  acknowledgment  in  a  policy  of  the  receipt  of  pre- 
mium is  conclusive  evidence  of  its  payment,  so  far  as  to  make  the  policy 
binding,  notwithstanding  any  stipulation  therein  that  it  shall  not  be 
binding  until  the  premium  is  actually  paid. 

Enacted  March  21,  1872. 

An  agent  for  an  insurance  company  delivered  a  policy  for  one  thousand  dollars  to 
the  owner  of  a  barn,  and  at  the  same  time  agreed,  verbally,  to  credit  the  owner  on 
the  premium  for  a  period  of  five  months.  The  barn  was  destroyed  by  fire  before  the 
period  of  credit  expired,  and  the  company  refused  to  pay  the  loss,  for  the  reason  that 
i  li<-  agent  had  exceeded  his  authority  in  granting  a  longer  time  of  credit  than  sixty 
days.  The  policy  contained  no  express  acknowledgment  of  payment,  but  recited  a 
i  "nsideration.  It  did  not  contain,  however,  a  proviso  that  the  company  should  not  be 
liable  by  virtue  of  the  policy,  or  any  renewal  thereof,  until  the  premium  therefor  had 
been  actually  paid.  On  appeal  the  supreme  court  decided  that  the  agent  having 
authority  to  grant  a  credit  on  the  premium  the  unconditional  delivery  of  the  policy  by 
him  to  the  owner  waived  the  general  provision  of  non-liability  until  after  payment  of 
the  premium  contained  in  the  policy.     (Famum  vs.  Phoenix  Ins.  Co.,  83  Cal.  246.) 

In  a  similar  case  and  upon  a  like  policy,  where  promissory  notes  were  given  for 
i  In-  premium,  and  where  the  policy  recited  that  the  premium  had  been  paid,  it  was 
decided  that  the  company  was  estopped  to  deny  payment,  and  that  the  proviso  for 
non-liability  of  the  company  until  after  actual  payment  of  the  premium  set  forth  in 
the  policy,  was  waived.     {Palmer  vs.  Continental  Ins.  Co.,  132  Cal.  68.) 

Agreement  not  to  transfer. 

Sec.  2599.  An  agreement  made  before  a  loss,  not  to  transfer  the 
claim  of  a  person  insured  against  the  insurer,  after  the  loss  has  hap- 
pened, is  void. 

Enacted  March  21,  1872. 


84  INST  TRANCE   LAWS   OP   CALIFORNIA. 

ARTICLE  VII. 

WARRANTIES. 

Sec.  2003.     Warranty,  express  or  implied. 

2004.  Form. 

2(50.").  Express  warranties  to  be  in  policy. 

2000.  Past,  present,  and  future  warranties. 

2(507.  Warranty  as  to  past  or  present. 

2005.  Warranty  as  to  the  future. 
2609.  Performance  excused. 

2010.  What  acts  avoid  the  policy. 

2011.  Policy  may  provide  for  avoidance. 
2(512.     Breach  without  fraud. 

Warranty,  expressed  or  implied. 

Sec.  2603.     A  warranty  is  either  expressed  or  implied. 

Enacted  March  21,  1872. 

A  policy  of  insurance  on  a  combined  harvester  provided  that  risk  assumed  should 
be  while  in  use  in  Tulare  County.  It  was  destroyed  by  fire  while  not  in  use.  hut 
while  housed  in  a  shed.  It  was  decided  by  the  court  that  the  company  was  not  liable 
on  the  policy.     (Stinkard  vs.  Manchester,  etc.  Co.,  122  Cal.  r>95.) 

Form. 

Sec.  2604.  No  particular  form  of  words  is  necessary  to  create  a 
warranty. 

Express  warranties  to  be  in  policy. 

Sec.  2605.  Every  express  warranty,  made  at  or  before  the  execution 
.of  a  policy,  must  be  contained  in  the  policy  itself,  or  in  another  instru- 
ment signed  by  the  insured  and  referred  to  in  the  policy,  as  making  a 
part  of  it. 

Enacted  March  21,  1872.     Amended,  Stats.  1873,  p.  255. 

Rankin  vs.  Amazon  F.  Ins.  Co.,  2.1  Pac  Rep.  200,  261;  89  Cal.  203,  on  rehearing. 
See  note  to  section  2.~>so.  ante. 

Past,  present  and  future  warranties. 

Sec.  2606.  A  warranty  may  relate  to  the  past,  the  present,  the 
future,  or  to  any  or  all  of  these. 

Enacted  March  21,  1872. 

A  stipulation  in  a  fire  policy  that  the  insurance  company  should  not  be  liable  for 
loss  caused  directly  or  indirectly  by  order  of  any  civil  authority,  is  not  a  warranty, 
but  where  (be  supervisors  of  a  county  ordered  tires  to  start  to  destroy  insects,  the  fact 
that  such  supervisors  bad  authority  under  the  law  to  start  the  fires,  was  sufficient  to 
relieve  an  insurer  of  grain  destroyed  thereby  from  liability  under  a  provision  of  the 
policy  that  the  insurer  should  not  be  liable  for  loss  occasioned  by  order  of  any  civil 
authority,  although  the  burning  of  the  grain  wras  occasioned  by  the  fire  getting  beyond 
control.     (Conner  vs.  Manchester  Assw.  Co.,  130  Fed.  Rep.  740,  743-4.) 

Warranty  as  to  past  or  present. 

Sec.  2607.  A  statement  in  a  policy,  of  a  matter  relating  to  the  person 
or  thing  insured,  or  to  the  risk,  as  a  fact,  is  an  express  warranty  thereof. 

Enacted  March  21,  1872. 

The  statement  in  a  policy  to  the  effect  that  the  insurers  were  the  owners  of  the 
property  insured,  while  in  fact  they  were  stockholders  and  creditors  of  a  corporation, 
which  was  solvent:  held  to  make  the  policv  void.  ( M cCormick  .vs.  Springfield  F.  & 
M.  I.  Co.,  66  Cal.  301.) 

Overvaluation,  failure  to  keep  a  watchman,  and  leasing  without  consent,  held  to 
avoid  policy  in  which  such  conditions  were  contained.  Sections  2607  and  2012  cited. 
(Wenzcl  vs.  Commercial  Ins.  Co.,  07  Cal.  43S.) 


INSURANCE    IN    GENERAL — WARRANTIES.  85 

Where  insured  made  a  statement  to  the  insuring  company  that  the  property  ahout 
to  he  insured  had  been  leased  to  a  certain  firm  which  lease  was  merely  verbal  held 
out  to  vitiate  the  policy.     (National  Bank  vs.  Union  Ins.  Co.,  88  Gal.  407.) 

Cornier  vs.  Manchester  Assur.  Co..  lot)  Fed.  Rep.  740-74-1. 

See  note  to  section  260(3,  ante. 

Warranty  as  to  the  future. 

Sec.  2608.  A  statement  in  a  policy,  which  imports  that  it  is  intended 
1<>  do  or  not  to  do  a  thing  which  materially  affects  the  risk,  is  a  warranty 
that  such  act  or  omission  shall  take  place. 

Enacted  March  21,  1872. 

An  action  commenced  against  a  surety  company  resulted  in  favor  of  the  company, 
a  judgment  of  nonsuit  having  been  entered.  The  action  was  on  a  bond  to  indemnify 
.in  employer  against  the  dishonesty  of  his  cashier  and  bookkeeper.  In  his  application 
for  the  bond,  in  answer  to  questions,  he  stated  that  all  the  books  and  accounts  of  his 
employee  would  be  examined  and  audited,  and  all  moneys,  securities,  vouchers,  and 
property  also  would  be  examined  and  verified,  by  himself  daily,  and  that  these  answers 
and  representations  were  true  and  should  be  held  to  form  the  basis  of  the  contract  for 
the  proposed  bond.  During  an  absence  of  four  days  of  the  employer  the  cashier 
absconded  with  his  employer's  money.  In  affirming  the  judgment  on  an  appeal  there- 
from, the  supreme  court  said:  "It  is  apparent  at  a  glance  that  the  employer  com- 
mitted a  breach  of  the  contract  of  indemnity  in  failing  to  examine  the  books,  etc., 
for  four  days."     <  Young  vs.  Pacific  Surety  Co.,  137  Cal.  596.) 

Conner  vs.  Manchester  Assur.  Co..  130  Fed.  Rep.  743-744. 

See  note  to  section  2000.  ante. 

Performance  excused. 

Sec.  2609.  When,  before  the  time  arrives  for  the  performance  of  a 
warranty  relating  to  the  future,  a  loss  insured  against  happens,  or  per- 
formance becomes  unlawful  at  the  place  of  the  contract,  or  impossible, 
the  omission  to  fulfill  the  warranty  does  not  avoid  the  policy. 

Enacted  March  21,  1872.     Amended,  Stats.  1873-4,  p.  255. 

What  acts  avoid  the  policy. 

Sec.  2610.  The  violation  of  a  material  warranty,  or  other  material 
provision  of  a  policy,  on  the  part  of  either  party  thereto,  entitles  the 
other  to  rescind. 

Enacted  March  21,  1872. 

Joshua  Bendy  1/.  Works  vs.  American  S.  li.  his.  Co.,  80  Cal.  248,  251. 
See  note  to  section  2580,  ante. 

Policy  may  provide  for  avoidance. 

Sec.  2611.  A  policy  may  declare  that  a  violation  of  specified  pro- 
visions thereof  shall  avoid  it,  otherwise  the  breach  of  an  immaterial 
provision  does  not  avoid  the  policy. 

Enacted  March  21,  1872. 

See  note  to  section  2007,  anie. 

The  ordinary  negligence  of  the  insured  and  his  agents  is  a  risk  which  the  insurer 
takes  upon  himself,  and  the  existence  of  which  does  not  absolve  him  from  liability. 
But  where  Hie  insured  warranto,  in  case  the  property  insured  was  idle  and  not  in 
use.  to  have  a  watchman  on  duty  constantly  day  and  night  in  and  immediately  about 
the  buildings  or  works,  he  bound  himself  to  the  performance  of  specific  acts  from 
which  no  negligence  could  exonerate  him.  regardless  of  whether  material  to  the  risk 
or  not.     (  McKenzie  vs.  Scottish  U.  d  N.  Jns.  Co.,  112  Cal.  54S,  558-9.) 

See  note  to  section  2021).  post. 

So  where  a  policy  provided  that  it  should  be  void  if  dynamite  were  kept,  used  or 
allowed  on  the  premises,  a  violation  of  such  condition  precluded  a  recovery  on  the 
policy  though  the  dynamite  did  not  cause  the  tire.  (Bastian  vs.  British  American, 
<  ir..  Co..  143  Cal.  287,  291 1 

Where  a  tender  of  premium  and  all  sums  due  was  made  within  a  reasonable  time 
after  premium  was  (\\\(\  the  action  of  the  company  in  refusing  to  accept  payment  on 
i  he  -round  that  policy  had  been  forfeited,  was  upheld.  (D'Orlx  vs.  Bankers'  d 
Merchants'  M.  L.  Assn..   l<;  Fed.  Elep.  355,  356.) 


86  INSURANCE   LAWS   OF   CALIFORNIA. 

Agreements  of  Parties. — The  parties  to  a  contract  of  insurance  have  a  legal 
right  to  agree  that  upon  the  happening  of  a  certain  event  there  should  be  no  neces- 
sity for  an  inquiry  as  to  the  increase  of  the  risk  therefrom  and  that  the  mere  event 
should  at  ouce  terminate  the  insurance,  and  having  done  so  the  insurer  is  lawfully 
entitled  to  the  advantage  thereof.  {Fountain  vs.  Connecticut  Fire  Ins.  Co.,  158  Cal. 
760,  139  Am.  St.  Rep.217,  112  Pac.  546.) 

Building  Falling. — Effect  of  clause  in  a  policy  of  insurance  providing  that  if  a 
building  or  any  part  thereof  fall  except  as  a  result  of  fire,  all  insurance  on  such  build- 
ing or  its  contents  shall  immediately  cease,  when  considered  with  this  section,  is  that 
the  question  whether  the  falling  of  a  part  of  the  building  increased  the  fire  risk  or 
not  is  wholly  immaterial,  provided  the  part  of  the  building  which  had  fallen  at  the 
time  the  fire  started  was  a  material  or  important  part  of  it.  (Fountain  vs.  Conm cli- 
ent Fire  Ins.  Co.,  158  Cal.  760,  139  Am.  St.  Rep.  217,  112  Pac.  546.) 

Insurer  Is  Bound  by  Tins  Statutory  Declaration  of  Law  whether  it  accords 
with  justice  or  not  and  by  a  provision  in  a  policy  that  upon  the  happening  of  a  given 
event  all  insurance  shall  immediately  cease,  as  this  in  substance  is  the  same  as  the 
statutory  declaration.  (Fountain  vs.  Connecticut  Fire  Ins.  Co.,  158  Cal.  760,  139 
Am.  St.  Rep.  217,  112  Pac.  546.) 

Breach  without  fraud. 

Sec.  2612.  A  breach  of  warranty,  without  fraud,  merely  exonerates 
an  insurer  from  the  time  that  it  occurs,  or  where  it  is  broken  in  its  incep- 
tion prevents  the  policy  from  attaching  to  the  risk. 

Enacted  March  21,  1872. 

See  note  to  section  2607,  ante. 


ARTICLE  VIII. 

PREMIUM. 

Sec.  2616.  When  premium  is  earned. 

2617.  Return  of  premium. 

2618.  When  not  allowed. 

2619.  Return  for  fraud. 

2620.  Over-insurance  by  several  insurers. 

2621.  Contribution. 

2622.  Proportionate  contribution. 

When  premium  is  earned. 

Sec.  2616.     An  insurer  is  entitled  to  payment  of  the  premium  as 

soon  as  the  thing  insured  is  exposed  to  the  peril  insured  against. 

Joshua  Hendi/  M.  Works  vs.  American  8.  B.  Ins.  Co.,  S6  Cal.  248,  252. 
See  note  to  section  2580,  ante.    14  Cal.  App.  222  (cited). 

Return  of  premium. 

Sec.  2617.  A  person  insured  is  entitled  to  a  return  of  premium,  as 
follows : 

1.  To  the  whole  premium,  if  no  part  of  his  interest  in  the  thing 
insured  be  exposed  to  any  of  the  perils  insured  against. 

2.  "Where  the  insurance  is  made  for  a  definite  period  of  time,  and  the 
insured  surrenders  his  policy,  to  such  proportion  of  the  premium  as 
corresponds  with  the  unexpired  time,  after  deducting  from  the  whole 
premium  any  claim  for  loss  or  damage  under  the  policy  which  has  pre- 
viously accrued. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  256. 

Joshua  Bendy  M.  Works  vs.  American  8.  B.  Ins.  Co.,  86  Cal.  248,  252. 
See  note  to  section  2580,  ante. 

Under  an  agreement  between  an  insurance  company  and  its  general  agents  whereby 
the  agents  were  to  receive  as  compensation  thirty-five  per  cent  of  the  gross  premiums 
"after  deducting  all  return  premiums,  rebates  and  reinsurances,"  they  were  properly 
chargeable  with  all  return  premiums  on  surrendered  policies  after  being  credited  with 
thirty-five  per  cent  of  the  full  amount  of  insurance  written  by  them,  and  as  this 


INSURANCE   IN    GENERAL PREMIUM,    LOSS.  87 

arrangement  necessarily  contemplated  that  return  premiums  might  be  payable  after 
the  termination  of  the  agency,  there  could  be  no  immediate  settlement  of  accounts  on 
termination  of  the  agency.  {Milwaukee  Mechanics'  Ins.  Co.  vs.  Warren,  150  Cal.  346, 
354.) 

When  not  allowed. 

Sec.  2618.  If  a  peril  insured  against  has  existed,  and  the  insurer 
lias  been  liable  for  any  period,  however  short,  the  insured  is  not  entitled 
to  return  of  premiums,  so  far  as  that  particular  risk  is  concerned. 

Enacted  March  21,  1872.     Amended,  Stats.  1873-4,  p.  256. 

Joshua  Wendy  M.  Works  vs.  American  &  B.  Ins.  Co.,  86  Cal.  248,  252. 

See  note  to  section  2580,  ante. 

Bank  of  Anderson  vs.  Home  Ins.  Co.,  14  Cal.  App.  222  (cited). 

Return  for  fraud. 

Sec.  2619.  A  person  insured  is  entitled  to  a  return  of  the  premium 
when  the  contract  is  voidable,  on  account  of  the  fraud  or  misrepresenta- 
tion of  the  insurer,  or  on  account  of  facts,  of  the  existence  of  which  the 
insured  was  ignorant  without  his  fault ;  or  when,  by  any  default  of  the 
Insured  oilier  than  actual  fraud,  the  insurer  never  incurred  any  liability 
under  the  policv. 

Enacted  March  21,  1872. 

Joshua  Bendy  M.  Works  vs.  American  8.  B.  Tns.  Co.,  86  Cal.  248,  252. 

See  note  to  section  2580,  ante. 

Bank  of  Anderson  vs.  Home  Ins.  Co..  14  Cal.  App.  222  (cited). 

Over-insurance  by  several  insurers. 

Sec.  2620.  In  case  of  an  over-insurance  by  several  insurers,  the  in- 
stiled is  entitled  to  a  ratable  return  of  the  premium,  proportioned  to  the 
amount  by  which  the  aggregate  sum  insured  in  all  the  policies  exceeds 
the  insurable  value  of  the  thing  at  risk. 

Enacted  March  21,  1872. 

Contribution. 

Sec.  2621.  When  an  over-insurance  is  effected  by  simultaneous  poli- 
cies, the  insurers  contribute  to  the  premium  to  be  returned  in  proportion 
to  the  amount  insured  bv  their  respective  policies. 

Enacted  March  21,  1872. 

Proportionate  contribution. 

Sec.  2622.  When  an  over-insurance  is  effected  by  successive  policies, 
those  only  contribute  to  a  return  of  the  premium  who  are  exonerated  by 
prior  insurances  from  the  liability  assumed  by  them,  and  in  proportion 
as  the  sum  for  which  the  premium  was  paid  exceeds  the  amount  for 
which,  on  account  of  prior  insurance,  they  could  be  made  liable. 

Enacted  March  21,  1872. 

ARTICLE  IX.    . 
LOSS. 

Sec.  202(1.  Perils  remote  and  proximate. 

2627.  Loss  incurred  in  rescue  from  peril. 

262S.  Excepted  perils. 

2020.  Negligence  and  fraud. 

Perils,  remote  and  proximate. 

Sec.  2626.  An  insurer  is  liable  for  ?i  loss  of  which  a  peril  insured 
againsl  was  the  proximate  cause;  although  a  peril  not  contemplated  by 


88  INSURANCE    LAWS   OF    CALIFORNIA. 

the  contract  may  have  been  a  remote  cause  of  the  loss;  but  he  is  not 
liable  for  a  loss  of  which  the  peril  insured  against  was  only  a  remote 
cause. 

Enacted  March  21,  1872. 

Construction. — This  section  makes  the  insurer  liable  when  the  peril  insured 
against  was  the  proximate  cause  of  the  loss,  although  a  peril  not  contemplated  may 
have  been  the  remote  cause.  (Pacific  Hcatinq  and  )'.  Co.  vs.  Williamsburgh  City 
Fire  Ins.  Co.,  158  Cal.  367,  11  Pac.  4.) 

As  to  the  construction  of  an  insurance  policy  and  the  exceptions  and  reservations 
therein,  see  Pacific  Heating  and  V.  Co.  vs.  Williamsburgh  City  Fire  Ins.  Co.,  MS  Cal. 
3(57,  111  Pac.  4. 

Loss  incurred  in  rescue  from  peril. 

Sec.  2627.  An  insurer  is  liable  where  the  thing  insured  is  rescued 
from  a  peril  insured  against,  that  would  otherwise  have  caused  a  loss,  if 
in  the  course  of  such  rescue  the  thing  is  exposed  to  a  peril  not  insured 
against,  which  permanently  deprives  the  insured  of  its  possession,  in 
whole  or  in  part ;  or  where  a  loss  is  caused  by  efforts  to  rescue  the  thing 
insured  from  a  peril  insured  against. 

Enacted  March  21,  1872. 

Excepted  perils. 

Sec.  2628.  Where  a  peril  is  specially  excepted  in  a  contract  of  insur- 
ance, a  loss,  which  would  not  have  occurred  but  for  such  peril,  is  thereby 
excepted;  although  the  immediate  cause  of  the  loss  was  a  peril  which 
was  not  excepted. 

Enacted  March  21,  1872. 

Sec  note  t<»  section  2626,  ante. 

Negligence  and  fraud. 

Sec.  2629.  An  insurer  is  not  liable  for  a  loss  caused  by  the  wilful 
act  of  the  insured;  but  he  is  not  exonerated  by  the  negligence  of  the  in- 
sured, or  of  his  agents  or  others. 

Enacted  March  12,  1872.    Amended,  Stats.  1873-4,  p.  256. 

See  note  to  section  2580,  ante. 

A  policy  of  insurance  provided  that  a  watchman  should  be  kept  in  and  upon  the 
premises  insured  day  and  night.  The  lower  court  found  that  a  watchman  was  not 
kept  thereon  from  and  after  the  hour  of  ten  o'clock  nightly  until  an  early  hour  of 
each  morning  thereafter,  and  that  no  watchman  was  in  or  upon  said  premises  at  the 
hour  of  ten  o'clock  of  the  night  when  the  fire  occurred.  It  was  claimed  by  the  plain- 
tiff that  the  insurer  was  not  exonerated  in  consequence  of  the  negligence  0f  the 
watchman,  but  the  court  decided  that  plaintiff  could  not  recover.  (Trojan  M.  Co.  vs. 
Fireman's  Ins.  Co.,  67  Cal.  27.) 

Where  a  watchman  was  employed,  and  at  the  time  the  fire  occurred  he  was  stand- 
ing  on  a  tramway  sixty-live  feet  away  from  the  mill  insured,  but  on  higher  ground, 
the  warrant v  was  held  to  be  complied  with.  (Sierra  Milling,  etc..  Co.  vs.  Hartford 
Fire  Ins.   Co..   76  Cal.  287.) 

A  warranty  contained  in  a  policy  of  insurance  of  a  sawmill  provided  that  in  case 
the  mill  was  shut  down  one  or  more  watchmen  should  be  on  duty,  constantly,  day  and 
night,  in  and  immediately  about  the  buildings  and  works:  and  further,  that  if  the 
buildings  and  works  should  remain  idle  for  more  than  thirty  days  notice  thereof 
should  be  given  to  the  insurer.  The  mill  was  shut  down  for  more  than  three  months, 
and  the  watchman  employed  did  not  remain  on  duty  later  than  ten  o'clock  each  night, 
when  he  retired.  He  slept  in  a  house  about  three  hundred  yards  away,  from  which 
the  mill  was  only  partially  visible.  The  mill  wras  destroyed  by  fire  at  11  :15  o'clock 
in  the  night.  Notice  that  the  mill  had  been  idle  was  not  given.  The  court  held  that 
both  warranties  had  been  violated  and  that  plaintiff  was  not  entitled  to  recover. 
(McKenzie  vs.  Scottish  U.  &  N.  Ins.  Co..  112  Cal.  548.) 

Where  an  insurance  company  was  sued  for  loss  of  an  insured  vessel  wrecked  by 
Moating  ice  in  Behring  sea.  an  allegation  in  the  answer  that  the  vessel  was  sailed  into 


INSURANCE    IN    GENERAL NOTICE    OF    LOSS.  89 

the  ice  with  knowledge  of  the  danger  to  he  encountered,  is  nol  an  allegation  that  the 
loss  was  caused  by  the  wilful  act  of  the  insured,  hut  an  allegation  of  negligent  devia- 
tion, which  would  constitute  no  defense  to  liability.  (Nome  Beach  L.  &  T.  Co.  vs. 
Munich  Atsur.  <'<>..  123  Fed.  Rep,  820.) 

The  conduct  of  the  master  of  a  vessel  on  a  voyage  to  Alaska  in  forcing  vessel 
through  floating  ice  with  knowledge  of  the  danger,  was  not  mere  negligence,  but  wil- 
ful omission  to" perform  his  legal  duty.  (Standard  Marine  Ins.  Co.  vs.  Nome  Beach 
L.  &  T.  Co.,  133  Fed.  Rep.  636.) 


ARTIOLF  X. 

NOTICE  OF  LOSS. 

SEC.  263a  Notice  of  loss. 

2633a.  Time  for  giving  notice  of  accident,  etc. 

2634.  Preliminary  proofs. 

Lie,: jr..  Waivers  of  defects  in  notice,  etc. 

2636.  Waiver  of  delay. 

'2(h\~.  Certificate,  when  dispensed  with. 

Notice  of  loss. 

Sec.  2633.  In  case  of  loss  upon  an  insurance  against  fire,  an  insurer 
is  exonerated,  if  notice  thereof  be  not  given  to  him  by  some  person 
insured,  or  entitled  to  the  benefit  of  the  insurance,  without  unnecessary 
delay. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  256. 

Time  for  giving  notice  of  accident,  etc. 

Sec.  2633a.  No  conditions,  stipulations  or  agreements  contained  in 
any  application  for  insurance  in  any  foreign  or  domestic  casualty  or 
accident  insurance  company,  or  contained  in  any  policy  issued  by  any 
such  company,  or  in  any  way  made  by  any  such  company,  limiting  the 
time  within  which  notice  of  the  accident  or  injury,  or  death,  shall  be 
given  to  such  company  to  a  period  of  less  than  twenty  days  after  the 
happening  of  the  accident,  or  injury,  or  death,  shall  be  valid.  Said 
notice  may  be  given  to  the  company  insuring,  at  any  time  within  twenty 
days  after  the  happening  of  the  accident,  or  injury,  or  death  and  shall 
be  valid  and  binding  on  the  company. 

Enacted  June  6,  1913.    In  effect  Aug.  10,  1913.    Stats  of  1913.  p.  677. 

Preliminary  proofs. 

Sec.  2634.  When  preliminary  proof  of  loss  is  required  by  a  policy, 
the  insured  is  not  bound  to  give  such  proof  as  would  be  necessary  in  a 
court  of  justice:  but  it  is  sufficient  for  him  to  give  the  best  evidence 
which  he  has  in  his  power  at  the  time. 

Enacted  March  21,  1872. 

Waivers  of  defects  in  notice,  etc. 

Sec.  2635.  All  defects  in  a  notice  of  loss,  or  in  preliminary  proof 
thereof,  which  the  insured  might  remedy,  and  which  the  insurer  omits 
to  specify  to  him,  without  unnecessary  delay,  as  grounds  of  objection, 
are  waived. 

Enacted  March  21,  1872. 

At  the  trial  of  an  action  to  recover  upon  an  insurance  policy,  it  was  contended 
ilwit  the  insurer  was  entitled  to  an  instruction  to  the  jury  to  the  effect  that  if  they 
found  that  the  plaintiff,  in  his  proof  of  loss  made  to  the  company,  had  made  any  false 
statements,  he  could  not  recover;  also,  that  the  plaintiff  could  not  recover  if  they 
found  that  plaintiff  had  refused  to  submit  the  matter  of  loss  to  arbitration.  On 
appeal  the  supreme  court  sustained  the  action  of  the  lower  court,  holding  that  fraud 
had  not  been  properly  charged  or  pleaded,  and  that  the  stipulation  which  provided 
for  arbitration  was  too  indefinite.     (Greiss  vs.  State  Inv.  Ins.  Co.,  98  Cal.  241.) 


90  INSURANCE    LAWS   OP    CALIFORNIA. 

Waiver  of  delay. 

Sec.  2636.  Delay  in  the  presentation  to  an  insurer  of  notice  or  proof 
of  loss  is  waived,  if  caused  by  any  act  of  his,  or  if  he  omits  to  make 
objection  promptly  and  specifically  upon  that  ground. 

Enacted  March  21,  1872. 

Certificate,  when  dispensed  with. 

Sec.  2637.  If  a  policy  requires,  by  way  of  preliminary  proof  of  loss, 
the  certificate  or  testimony  of  a  person  other  than  the  insured,  it  is  suffi- 
cient for  the  insured  to  use  reasonable  diligence  to  procure  it,  and  in 
case  of  the  refusal  of  such  person  to  give  it,  then  to  furnish  reasonable 
evidence  to  the  insurer  that  such  refusal  was  not  induced  by  any  just 
grounds  of  disbelief  in  the  facts  necessary  to  be  certified. 

Enacted  March  21,  1872. 

A  policy  of  insurance  provided  that  in  case  of  loss  the  insured  should  forthwith 
give  notice  thereof  and  should  also  produce  a  certificate  under  the  hand  and  seal  of 
the  nearest  magistrate  or  notary  public  not  concerned  in  the  loss,  nor  related  to  the 
assured,  stating  that  he  had  examined  the  circumstances  attending  the  loss,  knew  the 
character  and  circumstances  of  the  assured,  and  verily  believed  that  the  loss  had 
been  sustained  without  fraud.  The  nearest  magistrate  refused  to  make  the  certifi- 
cate required,  for  the  reason  that  he  had  been  employed  by  the  company  to  take  some 
affidavits,  and  another  signed  the  same.  Under  these  circumstances  the  certificate 
was  held  by  the  court  to  have  been  properly  made  and  furnished.  (Noone  vs.  Trans- 
ail  antic  F.  Ins.  Co.,  88  Cal.  152.) 


ARTICLE  XI. 

DOUBLE  INSURANCE. 

Sec.  2641.     Double  insurance. 

2642.     Contribution  in  case  of  double  insurance. 

Double  insurance. 

Sec.  2641.  A  double  insurance  exists  where  the  same  person  is 
insured  by  several  insurers  separately  in  respect  to  the  same  subject 
and  interest. 

Enacted  March  21,  1872. 

Contribution  in  case  of  double  insurance. 

Sec.  2642.  In  case  of  double  insurance,  the  several  insurers  are 
liable  to  pay  losses  thereon  as  follows : 

1.  In  fire  insurance,  each  insurer  must  contribute  ratably  towards 
the  loss,  without  regard  to  the  dates  of  the  several  policies. 

2.  In  marine  insurance,  the  liability  of  the  several  insurers  for  a 
total  loss,  whether  actual  or  constructive,  where  the  policies  are  not 
simultaneous,  is  in  the  order  of  the  dates  of  the  several  policies;  no 
liability  attaching  to  a  second  or  other  subsequent  policy,  except  as  to 
the  excess  of  the  loss  over  the  amount  of  all  previous  policies  on  the 
same  interest.  If  two  or  more  policies  bear  date  upon  the  same  day, 
they  are  deemed  to  be  simultaneous,  and  the  liability  of  insurers  on 
simultaneous  policies,  is  to  contribute  ratably  with  each  other.  The 
insolvency  of  any  of  the  insurers  does  not  affect  the  proportionate 
liability  of  the  other  insurers.  The  liability  of  all  insurers  on  the  same 
marine  interest  for  a  partial  or  average  loss,  is  to  contribute  ratably. 

Enacted  March  21.  1872.     Amended.  Stats.  1873-4.  p.  257. 


INSURANCE   IN    GENERAL — REINSURANCE.  91 

ARTICLE  XII. 

REINSURANCE. 

Sec.  2646.  Reinsurance,  what. 

2647.  Disclosures  required. 

2648.  Reinsurance  presumed  to  be  against  liability. 

2649.  Original  insured  has  no  interest. 

Reinsurance,  what. 

Sec.  2646.  A  contract  of  reinsurance  is  one  by  which  an  insurer 
procures  a  third  person  to  insure  him  against  lovs  or  liability  by  reason 
of  such  original  insurance. 

Enacted  March  21,  1872. 

After  notice  of  loss  the  insurer  and  reinsurer  consulted  and  agreed  that  the  claim 
was  illegal  and  should  be  contested.  On  suit  being  brought  the  original  insurer  aban- 
doned its  defense  and  compromised  without  notice  to  the  reinsurer.  The  reinsurer 
was  held  to  be  exonerated.  (Commercial  Union  Assurance  Co.  vs.  American  Central 
Insurance  Co.r  68  Cal.  430.) 

Where  policy  of  reinsurance  provides  for  no  past  loss,  it  will  not  be  given  a  retro- 
spective effect.     (Union  Ins.  Co.  vs.  American  F.  Ins.  Co.,  107  Cal.  327.) 

Where  a  contract  by  which  one  insurance  company  assumes  all  the  policies  and 
risks  of  another  like  company,  the  former  is  primarily  liable  to  the  insured,  and  in 
case  of  loss  may  be  sued  directly  on  its  obligation  by  the  insured.  (Whitney  vs. 
American  Ins.  Co.,  127  Cal.  464.) 

Disclosures  required. 

Sec.  2647.  Where  an  insurer  obtains  reinsurance,  he  must  commu- 
nicate all  the  representations  of  the  original  insured,  and  also  all  the 
knowledge  and  information  he  possesses,  whether  previously  or  subse- 
quently acquired,  which  are  material  to  the  risk. 

Enacted  March  21,  1872. 

Reinsurance  presumed  to  be  against  liability. 

Sec.  2648.  A  reinsurance  is  presumed  to  be  a  contract  of  indemnity 
against  liability,  and  not  merely  against  damage. 

Enacted  March  21,  1872. 

Union  Ins.  Co.  vs.  American  F.  Ins.  Co.,  107  Cal.  327,  330. 
See  note  to  section  2646,  ante. 

Original  insured  has  no  interest. 

Sec.  2649.  The  original  insured  has  no  interest  in  a  contract  of 
reinsurance. 

Enacted  March  21,  1872. 

Commercial  Union  Assur.  Co.  vs.  American  Cent.  his.  Co.,  68  Cal.  431,  433. 
See  note  tc  section  2646,  ante. 


92  INSURANCE. LAWS   OP    CALIFORNIA. 


CHAPTER  II. 

MARINE  INSURANCE. 

Article  I.  Definition  of  Marine  Insurance.     Sec.  2G55. 

II.  Insurable  Interest.     Sees.  2659-2665. 

III.  Concealment.  v  Sees.  2669-2672. 

IV.  Representation.     Sees.  2676-2677. 

V.  Implied  Warranties.     Sees.  2681-2688. 

VI.  The  Voyage,  and  Deviation.     Sees.  2692-2697. 

VII.  Loss.     Sees.  2701-2712. 

VIII.  Abandonment.     Sees.  2716-2732. 

IX.  Measure  of  Indemnity.     Sees.  2736-2746. 

ARTICLE  I. 

DEFINITION  OF  MARINE  INSURANCE. 

SEC.   2655.     Marino  insurance,  what. 
Marine  insurance,  what. 

Sec.  2655.  Marine  insurance  is  an  insurance  against  risks  connected 
with  navigation,  to  which  a  ship,  cargo,  freightage,  profits,  or  other 
insurable  interest  in  movable  property,  may  be  exposed  during  a  certain 
voyage  or  a  fixed  period  of  time. 

Enacted  March  21,  1872. 

Insurance  of  a  vessel  against  perils  of  the  sea  covers  a  loss  by  stranding  or  colli- 
sion, notwithstanding  the  loss  results  from  the  negligence  of  the  master  or  crow. 
(American-Hawaiian  8.  8.  Co.  vs.  Bennett,  207  Fed.  510.) 

Where  a  lighter,  being  operated  in  the  usual  way  in  the  tide  waters  of  Napa  creek 
by  means  of  a  gasoline  launch,  strikes  one  of  the  hanks  of  the  stream,  the  loss  is 
within  a  policy  insuring  against  perils  of  the  sea.  {American-Hawaiian  S.  8.  Co.  vs. 
Bennett,  207  Fed.  510.) 

As  to  what  is  "peril  of  the  sea"  within  a  marine  insurance  policy,  see  note  in 
Ann.  Cas.  1912d,  1038. 

ARTICLE  II. 

INSURABLE  INTEREST. 

Sec.  2650.  Insurable  interest  in  a  ship. 

2(5(50.  Interest   reduced  by  bottomry. 

2(5(51.  Freightage,  what. 

2(5(52.  Expected  freightage. 

2663.  Interest  in  expected  'freightage,  what. 

2664.  Insurable  interest  in  profits. 

2665.  Insurable  interest  of  charterer. 

Insurable  interest  in  a  ship. 

Sec.  2659.  The  owner  of  a  ship  has  in  all  cases  an  insurable  interest 
in  it,  even  when  it  has  been  chartered  by  one  who  covenants  to  pay  him 
its  value  in  case  of  loss. 

Enacted  March  21,  1872. 

Interest  reduced  by  bottomry. 

Sec.  2660.     The  insurable  interest  of  the  owner  of  a  ship  hypothe- 
cated by  bottomry  is  only  the  excess  of  its  value  over  the  amount  secured 
by  bottomry. 
'  Enacted  March  21,  1872. 

Freightage,  what. 

Sec.  2661.  Freightage,  in  the  sense  of  a  policy  of  marine  insurance. 
signifies  all  the  benefit  derived  by  the  owner,  either  from  the  chartering 
of  the  ship  or  its  employment  for  the  carriage  of  his  own  goods  or  those 
of  others. 

Enacted  March  21,  1872. 


INSURANCE  IN  GENERAL CONCEALMENT.  93 

Expected  freightage. 

Sec.  2662.  The  owner  of  a  ship  has  an  insurable  interest  in  expected 
freightage  which  he  would  have  certainly  earned  but  for  the  interven- 
tion of  a  peril  insured  against. 

Enacted  March  21,  1872. 

Interest  in  expected  freightage,  what. 

Sec.  2663.  The  interest  mentioned  in  the  last  section  exists,  in  the 
case  of  a  charter-party,  when  the  ship  has  broken  ground  on  the  char- 
tered voyage,  and  if  a  price  is  to  be  paid  for  the  carriage  of  goods  when 
they  arc  actually  on  board,  or  there  is  some  contract  for  putting  them  on 
board,  and  both  ship  and  goods  are  readv  for  the  specified  voyage. 

Enacted  March  21,  1872. 

Insurable  interest  in  profits. 

Sec.  2664.  One  who  has  an  interest  in  the  thing  from  which  profits 
are  expected  to  proceed,  has  an  insurable  interest  in  the  profits. 

Enacted  March  21,  1872. 

Insurable  interest  of  charterer. 

Sec.  2665.  The  charterer  of  a  ship  has  an  insurable  interest  in  it.  to 
the  extent  that  he  is  liable  to  be  damnified  by  its  loss. 

Enacted  March  21,  1872. 


ARTICLE  III. 

CONCEALMENT. 

Sec.  l'i'.i;:).  [nformation  must  be  communicated. 

2670.  Materia]  information. 

2871.  Presumption  of  knowledge  of  loss. 

2«»72.  Concealments  which  only  affect  the  risk  in  question. 

Information  must  be  communicated. 

Sec.  2669.  In  marine  insurance  each  party  is  bound  to  communicate, 
in  addition  to  what  is  required  by  section  2563,  all  the  information  which 
he  possesses,  material  to  the  risk,  except  such  as  is  mentioned  in  sec- 
tion 2564,  and  to  state  the  exact  and  whole  truth  in  relation  to  all 
matters  that  he  represents,  or  upon  inquiry  assumes  to  disclose. 

Enacted  March  21,  1872. 

Material  information. 

Sec.  2670.  In  marine  insurance,  information  of  the  belief  or  expec- 
tation of  a  third  person,  in  reference  to  a  material  fact,  is  material. 

Enacted  March  21,  1872. 

Presumption  of  knowledge  of  loss. 

Sec.  2671.  A  person  insured  by  a  contract  of  marine  insurance  is 
presumed  to  have  had  knowledge,  at  the  time  of  insuring,  of  a  prior  loss, 
if  the  information  might  possibly  have  reached  him  in  the  usual  mode  of 
transmission,  and  at  the  usual  rate  of  communication. 

Enacted  March  21,  1872. 

Concealments  which  only  affect  the  risk  in  question. 

Sec.  2672.  A  concealment  in  a  marine  insurance,  in  respect  to  any 
of  the  following  matters,  does  not  vitiate  the  entire  contract,  but  merely 
exonerates  the  insurer  from  a  loss  resulting  from  the  risk  concealed. 

1.  The  national  character  of  the  insured; 

2.  The  liability  of  the  thing  insured  to  capture  and  detention  ; 


1)4  INSURANCE    LAWS   OF    CALIFORNIA. 

3.  The  liability  to  seizure  from  breach  of  foreign  laws  of  trade ; 

4.  The  want  of  necessary  documents ;  and, 

5.  The  use  of  false  and  simulated  papers. 
Enacted  March  21,  1872. 

ARTICLE  IV. 

REPRESENTATIONS. 

Sec.  2676.     Effect  of  intentional  falsity. 
2677.     Representation  of  expectation. 

Effect  of  intentional  falsity. 

Sec.  2676.  If  a  representation,  by  a  person  insured  by  a  contnid  of 
marine  insurance,  is  intentionally  false  in  any  respect,  whether  material 
or  immaterial,  the  insurer  mav  rescind  the  entire  contract. 

Enacted  March  21,  1872. 

Representation  of  expectation. 

Sec.  2677.  The  eventual  falsity  of  a  representation  as  to  expectation 
does  not,  in  the  absence  of  fraud,  avoid  a  contract  of  insurance. 

Enacted  March  21,  1872. 


ARTICLE  V. 

IMPLIED  WARRANTIES. 

Sec.  2681.  Warranty  of  seaworthiness. 

2682.  Seaworthiness,  what. 

2683.  At  what  time  seaworthiness  must  exist. 

2684.  What  things  are  required  to  constitute  seaworthiness. 

2685.  Different  degrees  of  seaworthiness  at  different  stages  of  the  voyage. 

2686.  Unseaworthiness  during  the  voyage. 

2687.  Seaworthiness  for  purposes  of  insurance  on  cargo. 

2688.  Neutral  papers. 

Warranty  of  seaworthiness. 

Sec.  2681.  In  every  marine  insurance  upon  a  ship  or  freight,  or 
freightage,  or  upon  anything  which  is  the  subject  of  marine  insurance, 
a  warranty  is  implied  that  the  ship  is  seaworthy. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  257. 

Kven  if  there  be  no  technical  warranty  of  seaworthiness,  failure  to  provide  the 
vessel  with  ground  tackle  reasonably  fit  to  perform  the  services  and  meet  the  ordinary 
exigencies  of  the  voyage  contemplated,  was  a  breach  of  implied  warranty  of  sea- 
worthiness.    (Pope  vs.  The  Swiss  Lloyd  Ins.  Co.,  4  Fed.  Rep.  153.) 

Seaworthiness,  what. 

Sec.  2682.  A  ship  is  seaworthy,  when  reasonably  fit  to  perform  the 
services,  and  to  encounter  the  ordinary  perils  of  the  voyage,  contem- 
plated by  the  parties  to  the  policy. 

Enacted  March  21,  1872. 

At  what  time  seaworthiness  must  exist. 

Sec.  2683.  An  implied  warranty  of  seaworthiness  is  complied  with 
if  the  ship  be  seaworthy  at  the  time  of  the  commencement  of  the  risk, 
except  in  the  following  cases : 

1.  When  the  insurance  is  made  for  a  specified  length  of  time,  the 
implied  warranty  is  not  complied  with  unless  the  ship  be  seaworthy  at 


INSURANCE   IN    GENERAL — IMPLIED   WARRANTIES.  95 

the  commencement  of  every  voyage  she  may  undertake  during  that 
time;  and, 

2.  When  the  insurance  is  upon  the  cargo,  which,  by  the  terms  of  the 
policy,  or  the  description  of  the  voyage,  or  the  established  custom  of 
the  trade,  is  to  be  transshipped  at  an  intermediate  port,  the  implied 
warranty  is  not  complied  with,  unless  each  vessel  upon  which  the  cargo 
is  shipped,  or  transshipped,  be  seaworthy  at  the  commencement  of  its 
particular  voyage. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  257. 

See  note  to  section  2571,  ante. 

What  things  are  required  to  constitute  seaworthiness. 

Sec.  2684.  A  warranty  of  seaworthiness  extends  not  only  to  the 
condition  of  the  structure  of  the  ship  itself,  but.  requires  that  it  be 
properly  laden,  and  provided  with  a  competent  master,  a  sufficient 
number  of  competent  officers  and  seamen,  and  the  requisite  appurte- 
nances and  equipments,  such  as  ballast,  cables,  and  anchors,  cordage  and 
sails,  food,  water,  fuel,  and  lights,  and  other  necessary  or  proper  stores 
and  implements  for  the  voyage. 

Enacted  March  21,  1872. 

Different  degrees  of  seaworthiness  at  different  stages  of  the  voyage. 

Sec.  2685.  Where  different  portions  of  the  voyage  contemplated  by 
a  policy  different  in  respect  to  the  things  requisite  to  make  the  ship 
seaworthy  therefor,  a  warranty  of  seaworthiness  is  complied  with  if, 
at  the  commencement  of  each  portion,  the  ship  is  seaworthy  with  refer- 
ence to  that  portion. 

Enacted  March  21,  1872. 

Unseaworthiness  during  voyage. 

Sec.  2686.  When  a  ship  becomes  unseaworthy  during  the  voyage  to 
which  an  insurance  relates,  an  unreasonable  delay  in  repairing  the 
defect  exonerates  the  insurer  from  liability  from  any  loss  arising 
llicrefrom. 

Enacted  March  21,  1872. 

Seaworthiness  for  purposes  of  insurance  on  cargo. 

Sec.  2687.  A  ship  which  is  seaworthy  for  the  purpose  of  an  insur- 
ance upon  the  ship  may,  nevertheless,  by  reason  of  being  unfitted  to 
receive  the  cargo,  be  unseaworthy  for  the  purpose  of  insurance  upon 
the  cargo. 

Enacted  March  21,  1872. 

Neutral  papers. 

Sec.  2688.  Where  the  nationality  or  neutrality  of  a  ship  or  cargo 
is  exprt  ssly  warranted,  it  is  implied  that  the  ship  will  carry  the  requisite 
documents  to  show  such  nationality  or  neutrality,  and  that  it  will  not 
carry  any  documents  which  cast  reasonable  suspicion  thereon. 

Enacted  March  21,  1872. 


96  INSURANCE    LAWS   OF    CALIFORNIA. 

ARTICLE  VI. 

THE  VOYAGE,  AND  DEVIATION. 

Sec.  2602.  Voyage  insured,  how  determined. 

2693.  Course  of  sailing,  how  determined. 

2694.  Deviation,  what. 

2695.  When  proper. 

2696.  When  improper. 

2697.  Deviation  exonerates  the  insurer. 

Voyage  insured,  how  determined. 

Sec.  2692.  When  the  voyage  contemplated  by  a  policy  is  described 
by  the  places  of  beginning  and  ending,  the  voyage  insured  is  one  which 
conforms  to  the  course  of  sailing  fixed  by  mercantile  usage  between 
those  places. 

Enacted  March  21,  1872. 

Course  of  sailing,  how  determined 

Sec.  2693.  If  the  course  of  sailing  is  not  fixed  by  mercantile  usage, 
the  voyage  insured  by  a  policy  is  the  way  between  the  places  specified 
which,  to  a  master  of  ordinary  skill  and  discretion,  would  seem  the  most 
natural,  direct  and  advantageous. 

Enacted  March  21,  1872. 

i 
Deviation,  what. 

Sec.  2694.  Deviation  is  a  departure  from  the  course  of  the  voyage 
insured,  mentioned  in  the  last  two  sections,  or  an  unreasonable  delay 
in  pursuing  the  voyage,  or  the  commencement  of  an  entirely  different 
voyage. 

Enacted  March  21,  1872. 

When  proper. 

Sec.  2695.     A  deviation  is  proper : 

1.  When  caused  by  circumstances  over  which  neither  the  master  nor 
the  owner  of  the  ship  has  any  control ; 

2.  When  necessary  to  comply  with  a  warranty,  or  to  avoid  a  peril 
whether  insured  against  or  not ; 

3.  When  made  in  good  faith,  and  upon  reasonable  grounds  of  belief 
in  its  necessity  to  avoid  a  peril ;  or, 

4.  When  made  in  good  faith,  for  the  purpose  of  saving  human  life, 
or  relieving  another  vessel  in  distress. 

Enacted  March  21,  1872. 

When  improper. 

Sec.  2696.  Every  deviation  not  specified  in  the  last  section  is  im- 
proper. 

Enacted  March  21,  1872. 

Deviation  exonerates  the  insurer. 

Sec.  2697.  An  insurer  is  not  liable  for  any  loss  happening  to  a 
thing  insured  subsequently  to  an  improper  deviation. 

Enacted  March  21,  1872. 

Any  voluntary  deviation  is  a  change  of  risk  :  it  forms  a  departure  from  the  con- 
tract, and  an  attempt  to  substitute  another:  and  the  legal  effect  is  to  discharge  the 
insurer  from  liability  for  any  loss  happening  to  thp  thing  insured  subsequently  to 
the  unauthorized  deviation.  The  discharge  of  the  insurer  in  such  cases  depends,  not 
upon  any  supposed  increase  of  risk,  but  wholly  upon  the  departure  of  the  insured 
from  the  contract  of  insurance.     (Schroeder  vs.  Schweitzer  /,.  T.  V.  Q.,  66  Cal.  2t»4.) 


INSURANCE   IN   GENERAL — LOSS.  •  97 

ARTICLE  VII. 

LOSS. 

Sec.  2701.  Total  and  partial  loss. 

2702.  Partial  loss. 

2703.  Actual  and  constructive  total  loss. 

2704.  Actual  total  loss,  what. 

2705.  Constructive  total  loss. 

2706.  Presumed  actual  loss. 

2707.  Insurance  on  cargo,  etc.,  when  voyage  is  broken  up. 

2708.  Cost  of  reshipment,  etc. 

2700.     When  insured  is  entitled  to  payment. 

2711.  Average  loss. 

2712.  Insurance  against  total  loss. 

Total  and  partial  loss. 

Sec.  2701.     A  loss  may  be  either  total  or  partial. 
Ki.a.-tcd  March  21,  1872. 

Partial  loss. 

Sec.  2702.     Every  loss  which  is  not  total  is  partial. 
Enacted  .March  21,  1872. 

Actual  and  constructive  total  loss. 

Sec.  27():>.     A  total  loss  may  be  cither  actual  or  constructive. 

Enacted  March  21,  1872. 

Actual  total  loss,  what. 

Sec.  2704.     An  actual  total  loss  is  caused  by: 

1.  A  total  destruction  of  the  thing  insured  ; 

2.  The  loss  of  the  thing  by  sinking,  or  by  being  broken  up; 

■I.  Any  damage  to  the  thing  which  renders  it  valueless  to  the  owner 
for  the  purposes  for  which  he  held  it;  or, 

4.  Any  other  event  which  entirely  deprives  the  owner  of  the*  posses- 
sion, at  the  port  of  destination,  of  the  thing  insured. 

Enacted  March  21,  1872. 

hi  n  suit  brought  on  two  policies  of  insurance  issued  on  two  river  steamboats 
about  to  be  towed  from  Oregon  to  Alaska  but  which  met  with  such  damage  they 
could  uol  be  repaired  so  as  to  reach  their  point  of  destination,  the  loss  was  an  "actual, 
total  loss''  under  subdivisions  3  and  4  of  the  above  section.  (Progresso  8.  S.  Co.  vs. 
St.  I'd ul.  etc.,  Int.  Co.,  146  Cal.  279,  280.) 

Constructive  total  loss. 

Sec.  2705.  A  constructive  total  loss  is  one  which  gives  to  a  person 
insured  a  right  to  abandon,  under  section  2717. 

Enacted  March  21, 1872. 

I'nless  something  remains  of  value  to  pass  to  the  underwriter,  there  is  nothing  to 
abandon,  and  no  case  for  the  operation  of  the  doctrine  of  abandonment.  Where  dam- 
oged  cargo  was  sold  after  reaching  port  of  destination  in  satisfaction  of  salvage,  there 
was  no  abandonment  before  the  sale,  and  ii  was  held  there  could  be  none  afterwards 
to  create  constructive  total  loss.  (Standard  Marine  Ins.  Co.  vs.  Nome  Beach  L.  <& 
T.  Co..  133  Fed.  Rep.  636.) 

Presumed  total  loss. 

Shc.  2706.  An  actual  loss  may  be  presumed  from  the  continued 
absence  of  a  ship  without  being  heard  of;  and  the  length  of  time  which 
is  sufficient  to  raise  this  presumption  depends  on  the  circumstances  of 
the  case. 

Enacted  March  21,  1872. 

7— IL 


98  INSURANCE   LAWS   OP    CALIFORNIA. 

Insurance  on  cargo,  etc.,  when  voyage  is  broken  up. 

Sec.  2707.  When  a  ship  is  prevented,  at  an  intermediate  port,  from 
completing  the  voyage,  by  the  perils  insured  against,  the  master  must 
make  every  exertion  to  procure,  in  the  same  or  a  contiguous  port, 
another  ship,  for  the  purpose  of  conveying  the  cargo  to  its  destination ; 
and  the  liability  of  a  marine  insurer  thereon  continues  after  they  are 
thus  reshipped. 

Enacted  March  21,  1872. 

Cost  of  reshipment,  etc. 

Sec.  2708.  In  addition  to  the  liability  mentioned  in  the  last  section 
a  marine  insurer  is  bound  for  damages,  expenses  of  discharging,  storage, 
reshipment,  extra  freightage,  and  all  other  expenses  incurred  in  saving 
cargo  reshipped  pursuant  to  the  last  section,  up  to  the  amount  insured. 

Enacted  March  21,  1872. 

When  insured  is  entitled  to  payment. 

Sec.  2709.  Upon  an  actual  total  loss,  a  person  insured  is  entitled 
to  payment  without  notice  of  abandonment. 

Enacted  March  21,  1872. 

Average  loss. 

Sec.  2711.  Where  it  has  been  agreed  that  an  insurance  upon  a  par- 
ticular thing,  or  a  class  of  things,  shall  be  free  from  particular  average, 
a  marine  insurer  is  not  liable  for  any  particular  average  loss  not  depriv- 
ing the  insured  of  the  possession,  at  the  port  of  destination,  of  the  whole 
of  such  thing,  or  class  of  things,  even  though  it  become  entirely  worth- 
less; but  he  is  liable  for  his  proportion  of  all  general  average  loss 
assessed  upon  the  thing  insured. 

Enacted  March  21,  1872.     Amended,  Stats.  1873-4,  p.  259. 

Insurance  against  total  loss. 

Sec.  2712.  An  insurance  confined  in  terms  to  an  actual  total  loss,  does 
not  cover  a  constructive  total  loss,  but  covers  any  loss  which  necessarily 
results  in  depriving  the  insured  of  the  possession,  at  the  port  of  destina- 
tion, of  the  entire  thing  insured. 

Enacted  March  21,  1872.     Amended,  Stats.  1873-4,  p.  259. 


ARTICLE  VIII. 

ABANDONMENT. 

Sec.  271G.  Abandonment,  what. 

2717.  When  insured  may  abandon. 

2718.  Must  be  unqualified. 
2710.  When  may  be  made. 

2720.  Abandonment  may  be  defeated. 

2721.  How  made. 

2722.  Requisites  of  notice. 

2723.  No  other  cause  can  be  relied  on. 

2724.  Effect. 

2725.  Waiver  of  formal  abandonment. 

272G.  Agents  of  the  insured  become  agents  of  the  insurer. 

2727.  Acceptance  not  necessary. 

2728.  Acceptance  conclusive. 

2720.  Accepted  abandonment,  irrevocable. 

2730.  Freightage,  how  affected  by  abandonment  of  ship. 

2731.  Refusal  to  accept. 

2732.  Omission  to  abandon. 


INSURANCE   IN   GENERAL — ABANDONMENT.  99 

Abandonment,  what. 

Sec.  2716.  Abandonment  is  the  act  by  which,  after  a  constructive 
total  loss,  a  person  insured  by  contract  of  marine  insurance  declares  to 
the  insurer  that  he  relinquishes  to  him  his  interest  in  the  thing  insured. 

Enacted  March  21,  1872. 

When  insured  may  abandon. 

Sec.  2717.  A  person  insured  by  a  contract  of  marine  insurance  may 
abandon  the  thing  insured,  or  any  particular  portion  thereof  separately 
valued  by  the  policy,  or  otherwise  separately  insured,  and  recover  for  a 
total  loss  thereof,  when  the  cause  of  the  loss  is  a  peril  insured  against : 

1.  If  more  than  half  thereof  in  value  is  actually  lost,  or  would  have 
to  be  expended  to  recover  it  from  the  peril ; 

2.  If  it  is  injured  to  such  an  extent  as  to  reduce  its  value  more  than 
one  half; 

3.  If  the  thing  insured,  being  a  ship,  the  contemplated  voyage  can  not 
be  Lawfully  performed  without  incurring  an  expense  to  the  insured  of 
more  than  half  the  value  of  the  thing  abandoned,  or  without  incurring 
a  risk  which  a  prudent  man  would  not  take  under  the  circumstances ;  or, 

4.  If  the  thing  insured,  being  cargo  or  freightage,  the  voyage  can  not 
be  performed  nor  another  ship  procured  by  the  master,  within  a  reason- 
able time  and  with  reasonable  diligence,  to  forward  the  cargo,  without 
incurring  the  like  expense  or  risk.  But  freightage  can  not  in  any  case 
be  abandoned,  unless  the  ship  is  also  abandoned. 

Enacted  March  21,  1872. 

In  a  case  where  the  insurance  policies  contained  the  provision  that  the  vessels 
insured  were  "warranted  free  from  all  average  and  salvage,"  it  was  claimed  that  this 
limited  the  tight  of  recovery  to  an  "actual,  total  loss"  only,  and  excluded  the  "right 
to  abandon"  for  "constructive  total  loss,"  but  the  question  became  immaterial  as  the 
loss  was  found  to  be  an  actual  total  loss.  (Progresso  S.  S.  Co.  vs.  St.  Paul,  etc., 
In*.  Co.,  146  Cal.  279,  280.) 

Must  be  unqualified. 

Sec.  271 S.     An  abandonment  must  be  neither  partial  nor  conditional. 
Enacted  March  21,  1872. 

When  may  be  made. 

Sec.  2719.  An  abandonment  must  be  made  within  a  reasonable  time 
after  the  information  of  the  loss,  and  after  the  commencement  of  the 
voyage,  and  before  the  party  abandoning  has  information  of  its  com- 
pletion. 

Enacted  March  21,  1872. 

Abandonment  may  be  defeated. 

Sec.  2720.  "Where  the  information  upon  which  an  abandonment  has 
been  made  proves  incorrect,  or  the  thing  insured  was  so  far  restored 
when  the  abandonment  was  made  that  there  was  then  in  fact  no  total 
loss,  the  abandonment  becomes  ineffectual. 

Enacted  March  21,  1872. 

How  made. 

Sec.  2721.  Abandonment  is  made  by  giving  notice  thereof  to  the 
insurer,  which  may  be  done  orally,  or  in  writing. 

Enacted  March  21,  1872. 


100  INSURANCE   LAWS   OF    CALIFORNIA. 

Requisites  of  notice. 

Sec.  2722.  A  notice  of  abandonment  must  be  explicit,  and  must 
specify  the  particular  cause  of  the  abandonment,  but  need  state  only 
enough  to  show  that  there  is  probable  cause  therefor,  and  need  not  be 
accompanied  with  proof  of  interest  or  of  loss. 

Enacted  March  21,  1872. 

No  other  cause  can  be  relied  on. 

Sec.  2723.  An  abandonment  can  be  sustained  only  upon  the  cause 
specified  in  the  notice  thereof. 

Enacted  March  21,  1872. 

Effect. 

Sec.  2724.  An  abandonment'  is  equivalent  to  a  transfer,  by  the 
insured,  of  his  interest,  to  the  insurer,  with  all  the  chances  of  recovery 
and  indemnity. 

Enacted  March  21,  1872. 

Waiver  of  formal  abandonment. 

Sec.  2725.  If  a  marine  insurer  pays  for  a  loss  as  if  it  were  an  actual 
total  loss,  he  is  entitled  to  whatever  may  remain  of  the  tiling  insured,  or 
its  proceeds  or  salvage,  as  if  there  had  been  a  formal  abandonment. 

Enacted  March  21,  1872. 

Agents  of  the  insured  become  agents  of  the  insurer. 

Sec.  2726.  Upon  an  abandonment,  acts  done  in  good  faith  by  those 
who  were  agents  of  the  insured  in  respect  to  the  thing  insured,  subse- 
quent to  the  loss,  are  at  the  risk  of  the  insurer,  and  for  his  benefit. 

Enacted  March  21,  1872. 

Acceptance  not  necessary. 

Sec.  2727.  An  acceptance  of  an  abandonment  is  not  accessary  to  the 
rights  of  the  insured,  and  is  not  to  be  presumed  from  the  mere  silence 
of  the  insurer,  upon  his  receiving  notice  of  abandonment. 

Enacted  March  21,  1872. 

Acceptance  conclusive. 

Sec.  2728.  The  acceptance  of  an  abandonment,  whether  express  or 
implied,  is  conclusive  upon  the  parties,  and  admits  the  loss  and  the  suffi- 
ciency of  the  abandonment. 

Enacted  March  21,  1872. 

Accepted  abandonment,  irrevocable. 

Sec.  2729.     An  abandonment  once  made  and  accepted  is  irrevocable, 
unless  the  ground  upon  which  it  was  made  proves  to  be  unfounded. 
Enacted  March  21,  1872. 

Freightage,  how  affected  by  abandonment  of  ship. 

Sec.  2730.  On  an  accepted  abandonment  of  a  ship,  freightage  earned 
previous  to  the  loss  belongs  to  the  insurer  thereof;  but  freightage  sub- 
sequently earned  belongs  to  the  insurer  of  the  ship. 

Enacted  March  21,  1872. 

Refusal  to  accept. 

Sec.  2731.  If  an  insurer  refuses  to  accept  a  valid  abandonment,  lie 
is  liable  as  upon  an  actual  total  loss,  deducting  from  the  amount  any 


INSURANCE    IN    GENERAL MEASURING   OF   INDEMNITY.  101 

proceeds  of  the  thing  insured  which  may  have  come  to  the  hands  of  the 
insured. 

Enacted  March  21,  1872. 

Omission  to  abandon. 

Sec.  2732.     If  a  person  insured  omits  to  abandon,  he  may  m-wrl he- 
less  recover  his  actual  loss. 

Enacted  .March  21,  1872. 


ARTICLE  IX. 
MEASURE  OF  INDEMNITY. 


Sec.  2736. 

Valuation,  when  conclusive. 

2737. 

Partial  loss. 

2738. 

Profits. 

2739. 

Valuation  apportioned. 

2740. 

Valuation  applied  to  profits. 

2741. 

Estimating;  loss  under  open  policy 

2742. 

Arrival  of  thing  damaged. 

274::. 

Labor  and  expenses. 

2741. 

General  average. 

274.".. 

Contribution. 

2746. 

One  third  new  for  old. 

Valuation,  when  conclusive. 

Sec.  2736.  A  valuation  in  a  policy  of  marine  insurance  is  conclusive 
between  the  parties  thereto  in  the  adjustment  of  either  a  partial  or  total 
loss,  if  the  insured  has  some  interest  kt  risk,  and  there  is  no  fraud  on 
his  part ;  except  that  when  a  thing  has  been  hypothecated  by  bottomry 
or  respondentia,  before  its  insurance,  and  without  the  knowledge  of  the 
person  actually  procuring  the  insurance,  he  may  show  the  real  value. 
But  a  valuation  fraudulent  in  fact  entitles  the  insurer  to  rescind  the 
contract. 

Enacted  March  21,  1872. 

See  note  to  section  2705,  ante. 
Partial  loss. 

Skc.  2737.  A  marine  insurer  is  liable  upon  a  partial  loss,  only  for 
such  proportion  of  the  amount  insured  by  him  as  the  loss  hears  to  the 
value  of  the  whole  interest  of  the  insured  in  the  property  insured. 

Enacted  March  21,  1872. 

Profits. 

Skc.  2738.  Where  profits  are  separately  insured  in  a  contract  of 
marine  insurance,  the  insured  is  entitled  to  recover,  in  case  of  loss,  a 
proportion  of  such  profits  equivalent  to  the  proportion  which  the  value 
of  the  propertv  lost  bears  to  the  value  of  the  whole. 

Enacted  March  21,  1872. 

Valuation  apportioned. 

Sec.  273!).  In  case  of  ;i  valued  policy  of  marine  insurance  on  freight- 
age or  cargo,  if  a  part  only  of  the  subject  is  exposed  to  risk,  the  valuation 
applies  only  in  proportion  to  such  part. 

Enacted  March  21,  1872. 


102  INSURANCE    LAWS   OP    CALIFORNIA. 

Valuation  applied  to  profits. 

Sec.  2740.  When  profits  are  valued  and  insured  by  a  contract  of 
marine  insurance,  a  loss  of  them  is  conclusively  presumed  from  a  loss  of 
the  property  out  of  which  they  were  expected  to  arise,  and  the  valuation 
fixes  their  amount. 

Enacted  March  21,  1872. 

Estimating  loss  under  an  open  policy. 

Sec.  2741.  In  estimating  a  loss  under  an  open  policj^  of  marine  in- 
surance the  following  rules  are  to  be  observed : 

1.  The  value  of  a  ship  is  its  value  at  the  beginning  of  the  risk  includ- 
ing all  articles  or  charges  which  add  to  its  permanent  value,  or  which 
are  necessary  to  prepare  it  for  the  voyage  insured ; 

2.  The  value  of  cargo  is  its  actual  cost  to  the  insured,  when  laden  on 
board,  or  where  that  cost  cannot  be  ascertained,  its  market  value  at  the 
time  and  place  of  lading,  adding  the  charges  incurred  in  purchasing 
and  placing  it  on  board,  but  without  reference  to  any  losses  incurred 
in  raising  money  for  its  purchase,  or  to  any  drawback  on  its  exporta- 
tion, or  to  the  fluctuations  of  the  market  at  the  port  of  destination,  or 
to  expenses  incurred  on  the  way  or  on  arrival ; 

3.  The  value  of  freightage  is  the  gross  freightage,  exclusive  of  pri- 
mage, without  reference  to  the  cost  of  earning  it ;  and, 

4.  The  cost  of  insurance  is  in  each  case  to  be  added  to  the  value  thus 
estimated. 

Enacted  March  21,  1872. 

Arrival  of  things  damaged. 

Sec.  2742.  If  cargo  insured  against  partial  loss  arrives  at  the  port 
of  destination  in  a  damaged  condition,  the  loss  of  the  insured  is  deemed 
to  be  the  same  proportion  of  the  value  which  the  market  price  at  that 
port,  of  the  thing  so  damaged,  bears  to  the  market  price  it  would  have 
brought  if  sound. 

Enacted  March  21,  1872. 

Labor  and  expenses. 

Sec.  2743.  A  marine  insurer  is  liable  for  all  the  expense  attendant 
upon  a  loss  which  forces  the  ship  into  port  to  be  repaired;  and  where 
it  is  agreed  that  the  insured  may  labor  for  the  recovery  of  the  property, 
the  insurer  is  liable  for  the  expense  incurred  thereby,  such  expense,  in 
either  case,  being  in  addition  to  a  total  loss,  if  that  afterwards  occurs. 

Enacted  March  21,  1872. 

General  average. 

Sec.  2744.  A  marine  insurer  is  liable  for  a  loss  falling  upon  the 
insured,  through  a  contribution  in  respect  to  the  thing  insured,  required 
to  be  made  by  him  towards  a  general  average  loss  called  for  by  a  peril 
insured  against. 

Enacted  March  21,  1872. 

Contribution. 

Sec.  2745.  Where  a  person  insured  by  a  contract  of  marine  insur- 
ance has  a  demand  against  others  for  contribution,  he  may  claim  the 
whole  loss  from  the  insurer,  subrogating  him  to  his  own  right  to  con- 
tribution.   But  no  such  claim  can  be  made  upon  the  insurer  after  the 


INSURANCE  IN  GENERAL FIRE  INSURANCE.  103 

separation  of  the  interests  liable  to  contribution,  nor  when  the  insured, 
having  the  right  and  opportunity  to  enforce  contribution  from  others, 
has  neglected  or  waived  the  exercise  of  that  right. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p..  259. 

One  third  new  for  old. 

Sec.  2746.  In  the  case  of  a  partial  loss  of  a  ship  or  its  equipments, 
the  old  materials  are  to  be  applied  toward  payment  for  the  new,  and 
whether  the  ship  is  new  or  old,  a  marine  insurer  is  liable  for  only  two 
thirds  of  the  remaining  cost  of  the  repairs,  except  that  he  must  pay  for 
anchors  and  cannon  in  full,  and  for  sheathing-metal  at  a  depreciation 
of  only  two  and  one  half  per  cent  for  each  month  that  it  has  been 
fastened  to  the  ship. 

Enacted  March  21,  1872. 


CHARTER   III. 

FIRE  INSURANCE. 

Sec.  L'".:;.     Alteration  increasing  risk. 

j£.>4.     Alteration  not  increasing  risk. 
2755.     Acts  of  the  insured. 
L'7."><;.     Measure  of  indemnity. 

L'7.V7.     Value  of  interest  in  policy  of  insurance.     How  may  be  fixed.     Total  or 
partial  loss. 

Alteration  increasing  risk. 

Sec.  2753.  An  alteration  in  the  use  or  condition  of  a  thing  insured 
from  that  to  which  it  is  limited  by  the  policy  made  without  the  consent 
of  the  insurer,  by  means  within  the  control  of  the  insured,  and  increas- 
ing the  risk,  entitles  an  insurer  to  rescind  a  contract  of  tire  insurance. 

Enacted  March  21,  1872. 

Fire  Insurance — Clause  as  to  Sole  and  Unconditional  Ownership — Equit- 
able Title. — A  vendee  in  possession  of  land,  under  a  valid  contract  of  purchase, 
which  he  is  entitled  to  enforce  specifically,  although  a  portion  of  the  purchase  price 
remains  unpaid,  is  the  holder  of  such  an  equitable  title  as  to  constitute  him  the  sole 
and  unconditional  owner  within  the  meaning  of  a  policy  of  insurance  containing  such 
a  clause.     (McCullough  vs.  Home  Ins.  Co.,  155  Cal.  662,  102  Pac.  814.) 

Same — Same — Option  to  Purchase. — One  in  possession  of  land  under  a  more 
option  to  purchase,  which  neither  binds  him  to  make  the  payments  or  complete  the 
purchase,  nor  the  vendor  to  convey  except  upon  condition,  is  not  a  sole  and  uncondi- 
tional owner  within  the  meaning  of  such  a  clause  in  a  policy  of  fire  insurance. 
{McCullough  vs.  Home  Ins.  Co.,  155  Cal.  663,  102  Pac.  814.) 

Same — Fallen  Building  Clause. — In  order  to  constitute  a  fallen  building  within 
the  meaning  of  a  clause  which  provides  that  the  insurance  shall  cease  when  the  build- 
ing or  any  part  thereof  shall  fall  except  as  the  result  of  fire,  the  building  must  have 
fallen  in  whole  or  in  part  to  such  an  extent  that  its  integrity  as  a  building  was 
destroyed  or  substantially  impaired.  (Clayburgh  vs.  Agricultural  Ins.  Co.,  155  Cal. 
709,  102  Pac.  812.) 

Same — Provision  of  Policy  Against  Waiver  by  Agents  and  Officers. — This 
provision  may  itself  be  waived  by  certain  officers  or  agents;  or  the  company  be 
•  stooped  from  relying  on  it.  (McCullough  vs.  Home  Ins.  Co.,  155  Cal.  664,  102  Pac. 
814.  See  Carroll  vs.  Girard  F.  Ins.  Co.,  72  Cal.  297,  13  Pac.  863 ;  Arnold  vs.  Amer- 
ican  Ins.  Co.,  148  Cal.  660,  84  Pac.  182;  Mackintosh  vs.  Agricultural  Ins.  Co.,  150 
Cal.  -110.   11!)  Am.  St.  Bep.  2:51.  89  Pac.  102.) 

Such  provision  has  no  reference  to  stipulations  after  a  loss  has  occurred,  such  as 
giving  notice  and  furnishing  proofs  of  loss.  {McCullough  vs.  Home  Insurance  Co., 
155  Cal,  664,  102  Pac.  814.) 


104  INSURANCE    LAWS   OF    CALIFORNIA. 

Alteration  not  increasing  risk. 

Sec.  2754.  An  alteration  in  the  use  or  condition  of  a  thing  insured 
from  that  to  which  it  is  limited  by  the  policy,  which  does  not  increase 
the  risk,  does  not  affect  a  contract  of  fire  insurance. 

Enacted  March  21,  1872. 

Where  policy  of  insurance  was  issued  on  combined  harvester  while  in  use,  and  it 
was  destroyed  by  fire  while  housed  in  a  shed,  the  alteration  in  the  risk  was  held  to 
be  fatal  to  a  recovery  of  the  insurance  money.  (SlinJeard  vs.  Manchester,  etc.,  Co., 
122  Cal.  595.) 

See  note  to  section  2753. 

Acts  of  the  insured. 

Sec.  2755.  A  contract  of  fire  insurance  is  not  affected  by  any  act 
'of  the  insured  subsequent  to  the  execution  of  the  policy,  which  does  not 
violate  its  provisions,  even  though  it  increases  the  risk  and  is  the  cause 
of  a  loss. 

Enacted  March  21,  1872. 

Measure  of  indemnity. 

Sec.  2756.  If  there  is  no  valuation  in  the  policy,  the  measure  of 
indemnity  in  an  insurance  against  fire  is  the  expense  it  would  be  to  the 
insured  at  the  time  of  the  commencement  of  the  fire  to  replace  the  thing 
lost  or  injured  in  the  condition  in  which  it  was  at  the  time  of  the  injury ; 
but  the  effect  of  a  valuation  in  a  policy  of  fire  insurance  is  the  same  us 
in  a  policy  of  marine  insurance. 

Enacted  March  21,  1872. 

Value  of  interest  in  policy  of  insurance;  how  may  be  fixed;  total  or  partial 
loss. 

Sec.  2757.  Whenever  the  insured  desires  to  have  a  valuation  named 
in  his  policy,  insuring  any  building  or  structure  against  fire,  he  may 
require  such  building  or  structure  to  be  examined  by  the  insurer  and 
the  value  of  the  insured's  interest  therein  shall  be  thereupon  fixed  by 
the  parties.  The  cost  of  such  examination  shall  be  paid  for  by  the 
insured.  A  clause  shall  be  inserted  in  such  policy  stating  substantially 
that  the  value  of  the  insured's  interest  in  such  building  or  structure 
has  been  thus  fixed.  In  the  absence  of  any  change  increasing  the  risk 
without  the  consent  of  the  insurer  or  of  fraud  on  the  part  of  the  insured, 
then  in  case  of  a  total  loss  under  such  policy,  the  whole  amount  so 
insured  upon  the  insured's  interest  in  such  building  or  structure,  as 
stated  in  the  policy  upon  which  the  insurers  have  received  a  premium, 
shall  be  paid,  and  in  case  of  a  partial  loss  the  full  amount  of  the  partial 
loss  shall  be  so  paid,  and  in  case  there  are  two  or  more  policies  covering 
the  insured's  interest  therein,  each  policy  shall  contribute  pro  rata  to 
the  payment  of  such  whole  or  partial  loss.  But  in  no  case  shall  the 
insurer  be  required  to  pay  more  than  the  amount  thus  stated  in  such 
policy.  This  section  shall  not  prevent  the  parties  from  stipulating  in 
such  policies  concerning  the  repairing,  rebuilding  or  replacing  build- 
ings or  structures  wholly  or  partially  damaged  or  destroyed. 

Enacted  March  21,  1872. 


INSURANCE   IN    GENERAL — LIFE   AND   HEALTH.  105 

CHAPTER  IV. 

LIFE  AND  HEALTH  INSURANCE. 

Sec.  2762.  Insurance  upon  life,  when  payable. 

2763.  Insurable  interest. 

2764.  Assignee,  etc.,  of  life  policy  need  have  no  interest. 

2765.  Notice  of  transfer. 

2766.  Measure  of  indemnity. 

Insurance  upon  life,  when  payable. 

Sec.  2762.  An  insurance  upon  life  may  be  made  payable  on  the 
death  of  the  person,  or  on  his  surviving  a  specified  period,  or  periodically 
so  long  as  he  shall  live,  or  otherwise  contingently  on  the  continuance  or 
determination  of  life. 

Enacted  March  21,  1872. 

In  an  action  to  recover  on  a  life  insurance  policy,  where  payment  is  resisted  on 
the  ground  of  fraudulent  concealment  and  misrepresentations  made  in  the  answering 
of  certain  questions  contained  in  the  written  application  for  the  insurance,  it  is  error 
to  instruct  the  jury  that  in  rendering  special  verdicts  upon  the  answers  given  to  such 
questions  they  should  state  whether  or  not  such  answers  were  "substantially  true," 
without  further  instructing  them  as  to  the  meaning  of  such  term. 

"Substantially  true"  does  not  mean  somewhat  true,  partially  true,  on  the  one 
hand  :  nor  does  it  mean  true  in  every  possible  and  immaterial  respect  on  the  other. 
It  means  true,  without  qualification,  in  all  respects  material  to  the  risk. 

It  is  also  error  to  instruct  the  jury  in  such  an  action  that  notwithstanding  the 
fact  that  it  might  find  that  the  answers  and  representations  were  untrue,  it  should 
nevertheless  render  a  verdict  in  favor  of  the  plaintiff,  unless  it  found  that  such  repre- 
sentations were  material. 

Where  the  materiality  of  the  representations  depends  upon  inferences  drawn  from 
facta  and  circumstances  proved,  the  question  is  one  for  a  jury,  but  where  the  repre- 
sentations are  in  the  form  of  written  answers  made  to  written  questions,  the  parties 
have  thereby  deemed  the  matter  to  be  material. 

Evidence  of  declarations  made  by  the  insured  at  other  times  which  are  inconsistent 
with  the  representations  made  when  applying  for  the  policy  are  admissible  against 
the  beneficiary,  where  the  policy  in  terms  reserves  the  right  of  revocation  as  to  the 
beneficiary. 

Where  a  policy  of  life  insurance  reserves  to  the  insured  the  right  to  change  the 
beneficiary  upon  written  request  therefor,  the  interest  of  a  designated  beneficiary  prior 
to  the  death  of  the  insured  is  that  of  a  mere  expectancy  of  an  incompleted  gift,  sub- 
ject to  revocation  at  the  will  of  the  insured.  (McEtcen  vs.  New  York  Life  Ins.  Co., 
18  Cal.  App.  page  112.) 

Insurable  interest. 

Sec.  2763.  Every  person  has  an  insurable  interest  in  the  life  and 
health: 

1.  Of  himself; 

2.  Of  any  person  on  whom  he  depends  wholly  or  in  part  for  educa- 
tion or  support; 

3.  Of  any  person  under  a  legal  obligation  to  him  for  the  payment  of 
money,  or  respecting  property  or  services,  of  which  death  or  illness 
might  delay  or  prevent  the  performance;  and, 

4.  Of  any  person  upon  whoso  life  any  estate  or  interest  vested  in  him 
depends. 

Enacted  March  21,  1872. 

An  assignee  of  a  policy  of  Insurance,  as  security  for  an  indebtedness,  may  main- 
tain an  aetion  for  the  assured.  The  company  has  no  concern  with  the  application 
thereof  after  recovering.     {Curtisa  vs.  JEtna  L.  Ins.  Co..  00  Cal.  245.) 

Assignee,  etc.,  of  life  policy  need  have  no  interest. 

Sec.  27<>4.  A  policy  <>!'  insurance  upon  life  or  health  may  pass  by 
transfer,  will,  <>r  succession  to  any  person,  whether  he  has  an  insurable 


106  INSURANCE    LAWS   OF    CALIFORNIA. 

interest  or  not,  and  such  person  may  recover  upon  it  whatever  the 
insured  might  have  recovered. 
Enacted  March  21,  1872. 

Curtiss  vs.  JEtna  L.  Ins.  Co.,  90  Cal.  245,  248. 
See  note  to  section  2763,  ante. 

Notice  of  transfer.    . 

Sec.  2765.  Notice  to  an  insurer  of  a  transfer  or  bequest  thereof  is 
not  necessary  to  preserve  the  validity  of  a  policy  of  insurance  upon  life 
or  health,  unless  thereby  expressly  required. 

Enacted  March  21,  1872. 

Measure  of  indemnity. 

Sec.  2766.  Unless  the  interest  of  a  person  insured  is  susceptible  of 
exact  pecuniary  measurement,  the  measure  of  indemnity  under  a  policy 
of  insurance  upon  life  or  health  is  the  sum  fixed  in  the  policv. 

Enacted  March  21,  1872. 


CIVIL    ACTIONS PLEADINGS.  107 


CODE  OF  CIVIL  PROCEDURE. 


PART  II.    TITLE  III. 

PARTIES  TO  CIVIL  ACTIONS. 

Plaintiff  may  sue  in  one  action  the  different  parties  to  commercial  paper  or 
insurance  policies. 

Sec.  383,  Persons  severally  liable  upon  the  same  obligation  or  in- 
strument, including  the  parties  to  bills  of  exchange  and  promissory 
notes,  and  sureties  on  the  same  or  separate  instruments,  may  all  or  any 
of  them  be  included  in  the  same  action,  at  the  option  of  the  plaintiff; 
and  all  or  any  of  them  join  as  plaintiffs  in  the  same  action,  concerning 
or  affecting  the  obligation  or  instrument  upon  which  they  are  severally 
liable.  Where  the  same  person  is  insured  by  two  or  more  insurers  sepa- 
rately in  respect  to  the  same  subject  and  interest,  such  person,  or  the 
payee  under  the  policies,  or  the  assignee  of  the  cause  of  action,  or  other 
successor  in  interest  of  such  assured  or  payee,  may  join  all  or  any 
of  such  insurers  in  a  single  action  for  the  recovery  of  a  loss  under  the 
several  policies,  and  in  case  of  judgment  a  several  judgment  must  be 
rendered  against  each  of  such  insurers  according  as  his  liability  shall 
appear. 

Enacted  March  11,  1872.    Amended,  Stats.  1897,  p.  19;  1903,  p.  203. 

Moreing  vs.  Webster,  3  Cal.  App.  14,  22. 


PART  II.     TITLE  VI.     CHAPTER  IV. 

PLEADINGS  IN  CIVIL  ACTIONS. 

Actions  to  recover  insurance — what  defendant  claiming  exemption  must  set  up. 

Sec.  437a.  Jn  an  action  to  recover  upon  a  contract  of  insurance 
wherein  the  defendant  claims  exemption  from  liability  upon  the  ground 
that,  although  the  proximate  cause  of  the  loss  was  a  peril  insured  against, 
the  loss  was  remotely  caused  by  or  would  not  have  occurred  but  for  a 
peril  excepted  in  the  contract  of  insurance,  the  defendant  shall  in  his 
.niswer  set  forth  and  specify  the  peril  which  was  the  proximate  cause  of 
the  loss,  in  what  manner  the  peril  excepted  contributed  to  the  loss  or 
itself  caused  the  peril  insured  against,  and  if  he.  claim  that  the  peril 
excepted  caused  the  peril  insured  against,  he  shall  in  his  answer  set  forth 
and  specify  upon  what  premises  or  at  what  place  the  peril  excepted 
caused  the  peril  insured  against. 

Enacted,  Stats.  1907,  p.^  836. 

This  section  was  declared  unconstitutional  in  an  action  on  a  fire  insurance  policy 
upon  property  in  the  city  and  county  of  San  Francisco,  which,  among  other  exemp- 
tions, provided  "This  company  shall  not  he  liable  for  loss  caused  directly  or  indi- 
rectly by  earthquake,"  as  depriving  defendant  of  the  equal  protection  of  the  law, 
in  i lint  it  discriminates  against  a  particular  class  of  actions  and  against  defendants 
generally  without  apparent  reason  for  the  distinction;  and  was  also  held  invalid  as 
violating  tli<i  constitution  of  California,  article  4,  section  25,  subdivision  3,  prohibit- 
ing special  laws  regulating  the  practice  of  courts.  (Board  of  Education  vs.  Alliance 
.  Co.  (C.  C, ».  159  Fed,  Hep.  904.) 


108  INSURANCE    LAWS   OP    CALIFORNIA. 


PART  II.     TITLE  XIV.     CHAPTER  VII. 

SURETY  CORPORATIONS. 

Corporations  may  become  sureties  on  undertakings  and  bonds. 

Sec.  1056.  In  all  cases  where  an  undertaking  or  bond,  with  any  num- 
ber of  sureties  is  authorized  or  required  by  any  provision  of  this  code, 
or  of  any  law  of  this  state,  any  corporation  with  a  paid-up  capital  of  not 
less  than  one  hundred  thousand  dollars,  incorporated  under  the  laws  of 
tli is  or  any  other  state  of  the  United  States  for  the  purpose  of  making, 
guaranteeing,  or  becoming  a  surety  upon  bonds  or  undertakings  required 
or  authorized  by  law,  or  which,  by  the  laws  of  the  state  where  it  was 
originally  incorporated  has  such  power,  and  which  shall  have  complied 
with  all  the  requirements  of  the  law  of  this  state  regulating  the  forma- 
tion or  admission  of  these  corporations  to  transact  such  business  in  this 
state,  may  become  and  shall  be  accepted  as  security  or  as  sole  and  suffi- 
cient surety  upon  such  undertaking  or  bond,  and  such  corporate  surety 
shall  be  subject  to  all  the  liabilities  and  entitled  to  all  the  rights  of 
natural  persons'  sureties;  provided,  that  the  insurance  commissioner 
shall  have  the  same  jurisdiction  and  powers  to  examine  the  affairs  of 
such  corporations  as  he  has  in  other  cases;  shall  require  them  to  file  sim- 
ilar statements  and  issue  to  them  a  similar  certificate.  And  whenever 
the  liabilities  of  any  such  corporation  shall  exceed  its  assets,  the  insur- 
ance commissioner  shall  require  the  deficiency  to  be  paid  up  in  sixty 
days,  and  if  it  is  not  so  paid  up,  then  he  shall  issue  a  certificate  showing 
the  extent  of  such  deficiency,  and  he  shall  publish  the  same  once  a  week 
for  three  weeks,  in  a  daily  San  Francisco  paper.  And,  until  such  defi- 
ciency is  paid  up,  such  company  shall  not  do  business  in  this  state.  In 
estimating  the  condition  of  any  such  company,  the  commissioner  shall 
allow  as  assets  only  such  as  are  allowed  under  existing  laws  at  the 
time,  and  shall  charge  as  liabilities,  in  addition  of  eighty  per  cent  of  the 
capital  stock,  all  outstanding  indebtedness  of  the  company,  and  a  pre- 
mium reserve  equal  to  fifty  per  centum  of  the  premiums  charged  by 
said  company  on  all  risks  then  in  force. 

Enacted  .March  11,  1872.  Repealed,  Stats.  1880,  p.  111.  Enacted, 
Stats.  1889,  p.-  21 5. 

Amount  Paid  as  Premium  fob  Replevin  Bond  procured  pendente  lite  by  a 
plaintiff  ultimately  successful  is  not  recoverable  as  costs.  (*\Yilliams  vs.  Atchison, 
T.  <0  8.  F.  R.  Co.,  156  Cal.  140,  103  Pac.  885.) 

Undertakings  mentioned  in  this  code,  requisites  of. 

Sec.  1057.  In  any  case  where  an  undertaking  or  bond  is  authorized 
or  required  by  any  law  of  this  state,  the  officer  taking  the  same  must, 
except  in  the  case  of  such  a  corporation  as  is  mentioned  in  the  next  pre- 
ceding section,  require  the  sureties  to  accompany  it  with  an  affidavit 
that  they  are  each  residents  and  householders,  or  freeholders,  within  the 
state,  and  arc  each  worth  the  sum  specified  in  the  undertaking  or  bond, 
over  and  above  all  their  just  debts  and  liabilities,  exclusive  of  property 
exempt  from  execution ;  but  when  the  amount  specified  in  the  undertak- 
ing or  bond  exceeds  three  thousand  dollars,  and  there  are  more  than  two 
sureties  thereon,  they  may  state  in  their  affidavits  that  they  are  severally 
worth  amounts  less  than  the  amount  specified  in  the  undertaking  or 
bond,  if  the  whole  amount  is  equivalent  to  that  of  two  sufficient  sureties. 
Any  corporation  such  as  is  mentioned  in  the  next  preceding  section  may 


SURETY    C6RP0RATI0NS.  109 

become  sole  surety  on  such  bond.  No  such  corporation  must  be  accepted 
in  any  case  as  a  surety  when  its  liabilities  exceed  its  assets  as  ascertained 
in  tlic  manner  provided  in  section  1056.  Whenever  an  undertaking  has 
been  given  and  approved  in  any  action  or  proceeding,  and  it  is  there- 
after made  to  appear  to  the  satisfaction  of  the  court  that  any  surety 
upon  such  undertaking  has  for  any  reason  become  insufficient,  the  court 
may,  upon  notice,  order  the  giving  of  a  new  undertaking,  with  sufficient 
sureties,  in  lieu  of  such  insufficient  undertaking.  In  case  such  new 
undertaking  so  required  shall  not  be  given  within  the  time  required  by 
Mich  order,  or  in  case  the  sureties  thereon  fail  to  justify  thereon  when 
required,  all  rights  obtained  by  the  filing  of  such  original  undertaking 
shall  immediately  cease. 

Enacted  March  11,  1872.  Amended,  Stats.  1889,  p.  216;  Stats. 
1907,  p.  308. 

On  a  motion  to  dismiss  an  appeal,  the  two  foregoing  sections  were  considered  by 
Department  Two  of  the  supreme  court  of  this  state,  and  the  following  decision  was 
rendered,  viz : 

Dl  BAVEN,  J. — The  undertaking  on  appeal  herein  was  executed  by  the  Ameri- 
can  Surety  Company,  a  foreign  corporation,  and  the  respondent  moves  to  dismiss  the 
appeal,  upon  the  ground  that  the  undertaking  is  not  properly  signed,  and  upon  the 
further  ground  that  the  corporation  has  not  filed  with  the  secretary  of  state  a  desig- 
nation of  some  person  residing  in  this  state  upon  whom  service  of  summons  may  be 
made  ;is  required  by  the  act  relating  to  foreign  corporations,  approved  April  1,  1872. 
(State.  1871-2,  p.  826.)     ' 

1.  The  undertaking  is  signed  in  behalf  of  the  corporation  surety  by  its  second 
vie. -president  and  its  assistant  secretary,  and  has  affixed  to  it  the  seal  of  the  corpo- 
ration. There  is  nothing  before  us  to  show  that  these  officers  were  not  authorized  to 
sign  and  deliver  the  undertaking,  and  we  can  not,  therefore,  hold  that  the  under- 
taking is  void  because  not  properly  signed. 

2.  The  corporation  has  never  filed  with  the  secretary  of  state  a  paper  designating 
the  person  upon  whom  service  of  process  can  be  made  for  it  in  this  state,  as  required 
l>.\  the  act  of  the  legislature  above  referred  to;  but  it  appears  from  the  certificate  of 
the  insurance  commissioner  for  this  state  that  "The  American  Surety  Company  of 
New  York  City,  New  York,  is  duly  authorized  to  transact  business  in  this  state,  and 
has  been  so  authorized  since  December  5,  1884."  It  is  provided  by  section  105G  of 
the  Code  of  Civil  Procedure  that  in  respect  to  corporations  organized  for  the  purpose 
of  becoming  surety  on  bonds  or  undertakings  authorized  by  law,  "the  insurance  com- 
missioner shall  have  the  same  jurisdiction  and  powers  to  examine  the  affairs  of  such 
i  <  n><  rations  as  he  has  in  other  cases;  (and)  shall  require  them  to  file  similar  state- 
ments, and  issue  to  them  a  similar  certificate." 

The  certificate  referred  to  in  this  section  is  one  by  which  the  corporation  is  author- 
ized to  transact  business  in  this  state,  and  the  insurance  commissioner  is  not  author- 
ized to  issue  such  a  certificate  to  a  foreign  insurance  company  until  it  has  first  filed 
in  his  office  "the  name  of  an  agent  and  his  place  of  residence  in  this  state,  on  whom 
summons  and  other  process  may  be  served  in  all  actions  or  other  legal  proceedings 
against  such  corporation  or  company."  (Pol.  Code,  section  G1C». )  We  think  that 
under  section  1066  of  the  Code  of  Civil  Procedure  this  provision  of  section  G16  of 
the  Political  Code  also  applies  to  corporations  like  that  executing  the  undertaking  on 
appeal  in  this  case,  and  that  when  such  a  corporation  has  filed  with  the  insurance 
commissioner  the  designation  required  by  this  section  of  the  Political  Code,  that  is 
all  that  is  required  of  it  in  the. matter  of  naming  an  agent  upon  whom  process  in 
actions  against  it  may  be  served,  to  entitle  it  to  transact  business  in  this  state, 
although  the  failure  to  file  such  designation  with  the  secretary  of  state  might  deprive 
it  of  the  benefit  of  "the  statutes  of  this  state  limiting  the  time  for  the  commence- 
ment of  actions,"  as  provided  by  the  second  section  of  the  above  mentioned  act  of 
April  1.  1872. 

The  certificate  of  the  insurance  commissioner,  filed  by  the  appellant  herein,  while 
it  does  not  expressly  state  that  the  American  Surety  Company  has  complied  with 
section  616  of  the  Political  Code,  is  at  least  prima  facie  evidence  that  it  has  done  so. 
There  is  a  presumption  that  the  insurance  commissioner  properly  performed  his  official 
duty  in  issuing  this  certificate,  and  in  the  absence  of  any  evidence  showing  that  this 
certificate  was  issued  under  circumstances  not  authorized  by  law,  the  certificate  will 
be  regarded  as  sufficient  proof  that  it  was  properly  issued,  and  that  as  stated  above, 
the  American  Surety  Company  had  and  has  authority  to  transact  business  in  this 
state.  If,  in  fact,  that  corporation  has  not  complied  with  the  section  of  the  Political 
< 'ode  above  referred  to,  the  respondent  will  be  permitted  to  renew  his  motion,  and 
show  that  the  certificate  was  improperly  issued,  but  upon  the  facts  now  before  us, 
the  motion  to  dismiss  the  appeal  must  be  denied. 

Motion   denied. 

Outzeil  vs.  Pennie,  95  Cal.  598. 


110  INSURANCE   LAWS  OF   CALIFORNIA. 

Freeholders  or  Householders — Defective  Affidavit. — An  affidavit  of  a  stay 
bond  which  fails  to  state  that  the  sureties  were  freeholders  or  householders  is  defect- 
ive, and  the  bond  thereby  rendered  invalid.  {Maze  vs.  Langford,  16  Cal.  App.  74.r>, 
117  Pac.  929.) 

A  corporation  of  the  character  defined  by  sections  1056  and  1057  of  the  Code  of 
Civil  Procedure  as  enacted  in  1889,  need  not  be  accepted  as  sole  and  sufficient  surety 
upon  any  undertaking  no  matter  what  the  disparity  between  its  amount  and  the 
amount  of  the  corporate  assets,  but  may  be  required,  upon  exception  to  its  sufficiency 
as  surety  under  section  948  of  the  Code  of  Civil  Procedure,  to  show  surplus  assets 
equal  to  the  amount  of  its  undertaking. 

Fox  vs.  The  Hale  and  Nor  cross  S.  M.  Co.,  97  Cal.  353. 

How  corporate  sureties  shall  justify. 

Sec.  1057ft.  Whenever  the  surety  on  a  bond  or  undertaking  author- 
ized or  required  by  any  law  of  this  state  is  a  corporation  of  the  state  or 
a  foreign  corporation,  authorized  to  become  surety  on  bonds  or  under- 
takings in  the  state,  and  exception  is  taken  to  the  sufficiency  of  such 
surety  as  required  by  law,  such  corporate  surety  may  justify  on  such 
bond  or  undertaking  as  follows:  Any  agent,  attorney  in  fact,  or  officer 
of  such  corporation  shall  submit  to  the  court,  judge,  officer,  board  or 
other  person  before  whom  the  justification  is  to  be  made : 

First — The  original,  or  a  certified  copy  of,  the  power  of  attorney,  by- 
laws or"  other  instrument  showing  the  authority  of  the  person  or  persons 
who  executed  the  bond  or  undertaking  to  execute  the  same ; 

Second — A  certified  copy  of  the  certificate  of  authority  issued  by  the 
insurance  commissioner  as  required  by  section  596  of  the  Political  Code, 
showing  that  the  corporation  is  authorized  to  transact  business; 

Third — A  certificate  from  the  county  clerk  of  the  county  or  city  and 
county  in  which  the  bond  or  undertaking  is  filed,  showing  that  the  said 
certificate  of  authority  has  not  been  surrendered,  revoked,  canceled, 
anulled  or  suspended,  or  in  the  event  that  it  has  been,  that  renewed 
authority  to  act  under  such  certificate  has  been  granted,  as  provided  for 
in  section  625a  of  the  Political  Code ; 

Fourth — A  financial  statement  showing  the  assets  and  liabilities  of 
such  corporation  at  the  end  of  the  quarter  calendar  year  next  preceding 
the  date  of  the  execution  of  the  bond  or  undertaking;  such  financial 
statement  must  be  verified  under  oath  by  the  president,  or  a  vice-presi- 
dent and  attested  by  the  secretary  or  an  assistant  secretary  of  such 
corporation. 

Upon  complying  with  the  foregoing  provisions  and  it  appearing  that 
the  bond  or  undertaking  was  duly  executed,  that  the  corporation  is 
authorized  to  transact  business  in  the  state,  and  that  its  assets  exceed  its 
liabilities  in  an  amount  equal  to  or  in  excess  of  the  amount  of  the  bond 
or  undertaking,  the  justification  of  the  surety  shall  be  complete  and  it 
shall  be  accepted  as  the  sole  and  sufficient  surety  on  the  bond  or  under- 
taking. The  county  clerk  of  any  county  or  city  and  county  shall  upon 
request,  issue  the  certificate  hereinbefore  provided  for,  which  certificate 
shall  state  whether  or  not  the  certificate  of  authority  of  such  corporation 
has  been  surrendered,  revoked,  canceled,  anulled  or  suspended,  and  in 
the  event  that  it  has,  whether  or  not  renewed  authority  to  act  under  such 
certificate  of  authority  has  been  granted  as  provided  in  section  625a  of 
the  Political  Code.  For  each  certificate  issued  the  county  clerk  shall 
receive  a  fee  of  fifty  cents  to  be  paid  by  the  person  obtaining  the  cer- 
tificate. 

Enacted  March  20,  1911.     Stats.  1911,  p.  412. 


CRIMES  AGAINST  PROPERTY.  Ill 

PENAL  CODE. 


PART  I.     TITLE  XII. 

CRIMES  AGAINST  THE  REVENUE  OF  THE  STATE. 

Carrying  on  business  without  license. 

Sec.  435.  Every  person  who  commences  or  carries  on  any  business 
trade,  profession,  or  calling,  for  the  transaction  or  carrying  on  of  which 
a  license  is  required  by  any  law  of  this  state,  without  taking  out  or  pro- 
curing the  license  prescribed  by  such  law,  is  guilty  of  a  misdemeanor. 

Enacted  February  14,  1872. 

Effecting  insurance  on  account  of  foreign  companies  that  have  not  complied 
with  the  laws  of  this  state. 

Sec.  439.  Every  person  who  in  this  state  procures,  or  agrees  to  pro- 
cure, any  insurance  for  a  resident  of  this  state,  from  any  insurance  com- 
pany not  incorporated  under  the  laws  of  this  state,  unless  such  company 
or  its  agent  has  filed  the  bond  required  by  the  laws  of  this  state  relating 
to  insurance,  is  guilty  of  a  misdemeanor. 

Enacted  February^,  1872. 

On  the  20th  of  September,  1888,  one,  Hooper,  was  charged  before  a  police  court 
of  the  city  and  county  of  San  Francisco  with  having  committed  a  violation  of  this 
section,  as  follows:  On  the  13th  day  of  April,  1S88,  C.  W.  Mott,  a  resident  of  the 
State  of  California,  applied  to  Hooper  to  procure  him  an  insurance  for  four  thousand 
dollars  on  the  steamer  "Alliance''  at  a  named  rate  of  premium.  Hooper  was  the 
agent  of  J.  &  H.,  insurance  brokers,  having  their  principal  place  of  business  in  New 
York,  who  procured  the  insurance  in  the  China  Mutual  Insurance  Company  of  Bos- 
ton and  forwarded  the  policy  to  Hooper,  who  delivered  it  to  Mott.  The  company 
mentioned  was  not  incorporated  under  the  laws  of  the  State  of  California,  and  had 
not  executed  and  delivered  to  the  insurance  commissioner  the  bond  required  by  section 
623  of  the  Political  Code  of  the  State  of  California.  The  prisoner  was  convicted  and 
sentenced  to  pay  a  fine  of  five  dollars,  and,  in  default  to  be  imprisoned  for  twenty- 
four  hours  in  the  city  jail.  On  appeal  to  the  superior  court  the  judgment  of  the 
police  court  was  affirmed,  and  the  cause  was  taken  to  the  United  States  supreme 
court. 

It  was  argued  in  behalf  of  the  prisoner  that  the  section  amounts  to  a  regulation 
of  commerce  between  the  several  states  and  foreign  nations;  that  it  violates  the  right 
of  the  defendant  to  transact  any  business  in  the  State  of  California  not  opposed  to 
good  morals  or  the  health  of  the  community ;  that  it  is  not  a  police  regulation  ;  that 
it  is  in  violation  of  the  fourteenth  amendment,  and  for  these  reasons  unconstitutional. 

The  supreme  court  decided  that  the  business  of  insurance  is  not  commerce,  nor  an 
instrumentality  thereof,  but  merely  an  incident  thereto;  that  the  policy  having  been 
delivered  within  the  state,  and  the  premium  paid  within  the  state,  the  insurance  was 
procured  within  the  state ;  that  the  fourteenth  amendment  does  not  guarantee  to  a 
citizen  the  right  to  contract  within  his  state  in  violation  of  its  laws,  and  that  the 
foreign  insurance  company  not  having  complied  with  the  laws  of  the  state  and  not 
having  uiven  the  bond  required  thereby,  the  prisoner  had  been  guilty  of  a  misde- 
oieanoT  under  the  section  namen,  which  the  court  declared  to  be  in  no  respect  uncon- 
stitutional.    (Hooper  vs.  State  of  California,  155  U.  S.  648.) 

PART  I.     TITLE  XIII.     CHAPTER  I. 

CRIMES  AGAINST  PROPERTY. 

"Arson"  defined. 

Sec.  447.  Arson  is  the  wilful  and  malicious  burning  of  a  building, 
with  intent  to  destroy  it. 

Enacted  February*  14,  1872. 

Evidence  Aomissible  to  Show  Value  of  Furniture  in  House. — In  a  prosecu- 
lion  for  arson,  in  the  absence  of  evidence  that  the  property  possessed  a  different  or 


112  INSURANCE   LAWS   OF   CALIFORNIA. 

special  value  by  reason  of  being  installed  in  the  house,  the  market  value  thereof,  in 
view  of  the  insurance  obtained  thereon  by  defendant,  was  a  circumstance  which  the 
jury  was  entitled  to  consider  in  reaching  their  verdict.  (People  vs.  White,  19  Oal. 
App.  555,  126  Pac.  505,  506.) 

Same — Sufficiency. — Evidence  held  sufficient  to  justify  conviction  for  arson. 
(People  vs.  White,  19  Cal.  App.  555,  126  Pac.  505.) 

Instruction. — An  instruction  that  "To  constitute  a  burning,  it  is  not  necessary 
that  the  building  set  on  fire  should  have  been  destroyed.  It  is  sufficient  that  fire  is 
applied  so  as  to  take  effect  upon  any  part  of  the  substance  of  the  building,"  is  not 
open  to  the  contention  that  it  assumes  a  fact  the  existence  of  which  was  a  question 
for  the  jury  to  determine.  But,  however  that  may  be,  since  the  evidence  conclusively 
shows  that  the  fire  was  of  incendiary  origin,  which  fact  is  conceded  by  appellant,  no 
prejudice  could  result  from  the  giving  of  the  instruction.  (People  vs.  White,  19  Cal. 
App.  555,  126  Pac.  505,  506,  citing  People  vs.  Bcsold,  154  Cal.  363,  97  Pac.  871.) 

As  to  what  constitutes  arson,  see  notes,  81  Am.  Dec.  65 ;  101  Am.  St.  Rep.  21. 

"Building"  defined. 

Sec.  448.  Any  house,  edifice,  structure,  vessel,  or  other  erection, 
capable  of  affording  shelter  for  human  beings,  or  appurtenant  to  or  con- 
nected with  an  erection  so  adapted,  is  a  "building"  within  the  meaning 
of  this  chapter. 

Enacted  February  14,  1872. 

9  Cal.  App.  756  (cited). 

"Inhabited  building"  defined. 

Sec.  44!).  Any  building  which  has  usually  been  occupied  by  any 
person  Lodging  therein  at  night  is  an  "inhabited  building"  within  the 
meaning  of  this  chapter. 

Enacted  February  14,  1872. 

See  note  section  448. 

"Night-time"  defined. 

Sec.  450.  The  phrase  "night-time,"  as  used  in  this  chapter,  means 
the  period  between  sunset  and  sunrise. 

Enacted  February  14,  1872. 

"Burning"  defined. 

Sec.  451.  To  constitute  a  burning,  within  the  meaning  of  this 
chapter,  it  is  not  necessary  that  the  building  set  on  fire  should  have  been 
destroyed.  It  is  sufficient  that  fire  is  applied  so  as  to  take  effect  upon 
any  part  of  the  substance  of  the  building. 

Enacted  February  14,  1872. 

Ownership  of  the  building. 

Sec.  452.  To  constitute  arson  it  is  not  necessary  that  a  person  other 
than  the  accused  should  have  had  ownership  in  the  building  set  on  fire. 
It  is  sufficient  that  at  the  time  of  the  burning  another  person  was  right- 
fully in  possession  of,  or  was  actually  occupying  such  building,  or  any 
part  thereof. 

Enacted  February  14,  1872. 

Identification  Sufficient. — In  prosecution  for  arson,  it  is  not  necessary  for  the 
prosecution  to  prove  the  ownership  as  alleged  in  the  indictment,  provided  the  house 
was  otherwise  described  snHiciently  for  purposes  of  identification  and  otherwise  identi- 
fied by  the  evidence.     (People  vs.  LaverUj,  9  Cal.  App.  766,  7r>9.  100  Pac.  890.) 

Degrees  of  arson. 

Sec.  453.     Arson  is  divided  into  two  degrees. 
Enacted  Februarv  14,  1872. 


CRIMES    AGAINST    PROPERTY.  Il3 

Arson  of  the  first  degree.     Arson  of  the  second  degree. 

Sec.  454.  Maliciously  burning  in  the  night-time  an  inhabited  build- 
ing in  which  there  is  at  the  time  some  human  being,  is  arson  in  the  first 
degree.     All  other  kinds  of  arson  are  of  the  second  degree. 

Enacted  February  14,  1872. 

Punishment  of  arson. 

Sec.  455.  Arson  is  punishable  by  imprisonment  in  the  state  prison, 
as  follows: 

1.  Arson  in  the  first  degree,  for  not  less  than  two  years. 

'2.  Arson  in  the  second  degree,  for  not  less  than  one  nor  more  than 
twenty-five  years. 

Enacted  February  14,  1872.     Amended,  State.  1901,  p.  664. 


PART  I.    TITLE  XIII.     CHAPTER  XI. 
Burning  or  destroying  property  insured. 

Sec.  548.  Every  person  who  wilfully  burns  or  in  any  other  manner 
injures  or  destroys  any  property  which  is  at  the  time  insured  against 
loss  or  damage  by  fire,  or  by  any  other  casualty,  with  intent  to  defraud 
or  prejudice  the  insurer,  whether  the  same  be  the  property  of  or  in  pos- 
session of  such  person,  or  of  any  other,  is  punishable  by  imprisonment 
in  the  state  prison  not  less  than  one  nor  more  than  ten  years. 

Enacted  February  14,  1872. 

Information  SUFFICIENCY  OF. — Where  the  facts  constituting  the  crime  described 
in  this  section  are  set  forth  in  the  information,  it  is  immaterial  that  the  information 
also  designate  the  offense  as  "arson."  (People  vs.  Morley.  8  Gal.  App.  372,  37.'i.  J»7 
Pac.  84.) 

Ownkushii-  Immaterial. — One  who  burns  insured  property  with  the  intent  to 
destroy  is  guilty  whether  the  property  or  possession  be  his  or  that  of  another.  (People 
vs.    Uorley,  8  Cal.  App.  372,  376,  97  Pac.  84.) 

Validity  OB  Invalidity  of  the  Insurance  Policy  is  not  a  material  issue  in  a 
pins,  cut  ion  under  this  section.  The  gist  of  the  offense  is  the  intent  to  defraud  the 
tnsuier.     ( People  vs.  Morley,  8  Cal.  App.  372,  375,  97  Pac.  84.) 

Since  the  act  of  an  insured  person  in  setting  fire  to  the  insured  property  avoids 
the  insurance,  there  could  be  no  successful  prosecution  under  this  section  if  the 
inability  of  the  defendant  to  recover  upon  the  policy  be  a  defense.  (People  vs.  Mor- 
ley, 8  Cal.  App.  372,  375,  97  Pac.  84.) 

Presenting  false  proofs  upon  policy  of  insurance. 

SBC.  549.  Every  person  who  presents  or  causes  to  be  presented  any 
false  or  fraudulent  claim,  or  any  proof  in  support  of  any  such  claim, 
upon  any  contract  of  insurance  for  the  payment  of  any  loss,  or  who  pre- 
pare3,  makes,  or  subscribes  any  account,  certificate  of  survey,  affidavit,  or 
proof  of  loss,  or  other  book,  paper,  or  writing,  with  intent  to  present  or 
use  the  same,  or  to  allow  it  to  be  presented  or  used  in  support  of  any 
such  claim,  is  punishable  by  imprisonment  in  the  state  prison  not  exceed- 
ing three  years,  or  by  a  fine  not  exceeding-  one  thousand  dollars,  or  by 
both. 

Enacted  February  14,  1872. 

People  vs.  Di  h'l/una,  8  Cal.  App.  333  (cited). 


-     ii 


114  INSURANCE   LAWS   OP    CALIFORNIA. 


STATUTES. 


Act  of  March  26,  1868. 

The  following  sections  of  "An  act  creating  the  office  of  insurance  com- 
missioner, and  prescribing  his  duties  and  powers,"  approved  March  26, 
1868  (Stats.  1867-8,  p.  336),  were  considered  and  construed  by  the 
supreme  court  of  this  state  in  the  case  of  Palache  vs.  Pacific  Insurance 
Co.,  42  Cal.  418,  before  their  reenactment  in  the  Political  Code.  The 
sections  are: 

Sec.  7.  Whenever  the  liabilities  of  any  person  engaged  in  the  insur- 
ance business  for  lasses  reported,  for  expenses,  taxes,  and  reinsurance  of 
all  outstanding  risks,  estimated  at  fifty  per  cent  of  the  premiums 
received  on  fire  risks  and  marine  time  risks,  and  at  the  entire  premiums 
on  all  other  marine  risks,  and  at  such  rates  for  life,  accidental  and  other 
•kinds  of  insurance  as  shall  be  generally  accepted  by  the  actuaries  of  the 
states  of  New  York  and  Massachusetts,  would  impair  his  capital  stock- 
already  paid  in  to  an  extent  exceeding  twenty  per  cent,  such  person  is 
hereby  declared  to  be  insolvent. 

Sec.  8.  Whenever  it  shall  be  ascertained  by  the  commissioner  that 
any  person  engaged  in  the  insurance  business  in  this  state  is  insolvent, 
within  the  true  intent  and  meaning  of  this  act,  he  shall,  and  is  hereby 
empowered  to,  revoke  the  certificate  granted  in  behalf  of  such  person, 
and  shall  send  by  mail  to  such  person,  addressed  to  him  at  his  principal 
place  of  business,  or  deliver  to  him  personally,  notice  of  such  revocation, 
and  shall  cause  notice  of  such  revocation  to  be  filed  in  his  office,  and  also 
to  be  published  in  some  public  newspaper  published  in  the  city  of  San 
Francisco  for  at  least  four  weeks;  and  such  person  is  required,  after 
receiving  notice  of  said  revocation,  or  after  the  first  publication  thereof, 
to  discontinue  the  issuing  of  any  new  policies  and  the  renewal  of  any 
previously  issued ;  and  in  such  cases  the  commissioner  shall  require  the 
said  person,  or  his  manager  or  agent,  to  repair  its  capital  within  such 
period  as  he  may  designate  in  such  requisition.  Any  company,  corpora- 
tion, or  association  receiving  the  aforesaid  requisition  from  the  commis- 
sioner shall  forthwith  call  upon  its  stockholders,  by  assessments,  for  such 
amounts  as  will  make  its  capital  equal  to  the  amount  of  its  paid-up  cap- 
ital, exclusive  of  assets  needed  to  pay  all  ascertained  liabilities  for  losses 
reported,  for  expenses  and  taxes,  and  exclusive  of  the  entire  premiums 
received  for  outstanding  risks ;  and  in  case  any  stockholder  shall  refuse 
or  neglect  to  pay  the  amount  so  called  for,  it  shall  be  lawful  for  said 
company,  corporation,  or  association  to  enforce  said  assessment  by  such 
notice  and  sale  as  are  provided  for  by  the  act  entitled  "An  act  concern- 
ing assessments  upon  the  stock  of  corporations,"  approved  March 
twenty-sixth,  eighteen  hundred  and  sixty-six.  In  case  any  person,  upon 
the  requisition  of  the  commissioner  as  aforesaid,  shall  fail  to  make  up  the 
deficiency  of  his  capital  in  accordance  with  the  requirements  aforesaid, 
or  to  comply  in  all  respects  with  the  insurance  laws  of  this  state,  the 
commissioner  shall  communicate  the  fact  to  the  attorney  general,  whose 
duty  it  shall  then  become  to  commence  an  action  in  the  name  of  the 
people  of  this  state,  in  the  district  court  of  the  judicial  district  where  the 


INSURANCE    COMMISSIONER.  115 

person  in  question  is  located,  or  has  his  principal  office,  against  such  per- 
son, and  apply  for  an  order  requiring  him  to  show  cause  why  his  busi- 
ness should  not  be  closed ;  and  the  court  shall  thereupon  proceed  to  hear 
the  allegations  and  proofs  of  the  respective  parties  as  in  other  cases ;  and 
in  case  it  shall  appear  to  the  satisfaction  of  the  court  that  such  person  is 
insolvent,  as  aforesaid,  or  that  the  interests  of  the  public  so  require,  the 
court  shall  decree  a  dissolution  of  such  compan}',  corporation,  associa- 
tion, or  firm,  and  a  winding  up  of  its  affairs  and  a  distribution  of  the 
effects  of  such  person.  But  otherwise  the  court  shall  enter  a  decree 
annulling  the  act  of  the  commissioner  in  the  premises,  and  authorizing 
such  person  to  resume  business.  But  the  commissioner  shall  not  be  held 
liable  for  damages  in  the  attempted  performance  of  his  duty  herein,  if 
he  has  acted  in  good  faith.  In  the  event  of  any  additional  losses  occur- 
ring upon  new  risks  taken  after  the  expiration  of  the  period  limited  by 
the  commissioner  in  the  requisition,  and  before  the  deficiency  shall  have 
been  filled  up,  the  directors  of  any  company,  corporation,  or  association 
shall  be  individually  liable  to  the  extent  thereof. 

In  the  case  just  mentioned  it  appeared  from  the  agreed  statement  of  facts  that 
the  insurance  commissioner  had  made  an  examination  of  the  business  affairs  of  the 
defendant  company,  on  the  20th  day  of  October,  1871,  and  found  its  capital  to  be 
impaired  in  consequence  of  the  disastrous  Chicago  fire.  He  then  notified  the  com- 
pany to  repair  iis  capital  on  or  before  the  30th  day  of  December,  1801,  but  did  not 
revoke  bis  certificate  of  authority  to  do  business,  and  did  not  publish  any  notice  of 
revocation  of  such  certificate  of  authority. 

Immediately  on  receiving  the  notice  of  the  insurance  commissioner,  the  board  of 
directors  of  the  defendant  company  assembled  and  levied  an  assessment  of  seventy- 
live  per  cent  upon  the  capital  stock.  At  that  time  a  general  statute  provided  that 
no  one  assessment  should  exceed  five  per  cent  of  the  stated  amount  of  capital  stock 
of  any  corporation.     (Stats.  1865-6,  p.  458.) 

At  the  time  of  the  levy  of  the  assessment  mentioned,  one  Ashburner  was  the  owner 
of  a  certificate  for  ten  shares  of  the  capital  stock  of  the  defendant  company,  and  after- 
wards, on  the  .">0th  day  of  October,  1871,  sold  and  assigned  the  same,  in  due  form,  to 
plaintiff  in  said  action. 

A  by-law  of  the  defendant  company  provided  that  no  transfer  of  stock  should  be 
made  upon  the  books  of  the  company  until  after  payment  of  all  assessments  imposed 
thereon. 

On  the  day  of  the  transfer  mentioned,  the  plaintiff,  as  the  assignee  of  Ashburner, 
tendered  the  said  certificate  of  stock  for  cancellation,  and  requested  the  officers  of 
the  company  to  enter  the  transfer  upon  the  books  of  the  corporation,  and  to  issue  to 
him  a  new  certificate  for  the  said  number  of  shares;  but  these  officers  refused  to  do 
so,  upon  the  ground  that  an  assessment  of  seventy-five  per  cent  had  been  duly  levied 
upon  the  capital  stock,  which  had  not  been  paid  (and  which  plaintiff  refused  to  pay), 
in  conformity  with  said  by-laws. 

The  defendant  brought  this  action  to  compel  said  transfer,  and  judgment  going  for 
the  defendant  company  in  the  lower  court,  appealed  to  the  supreme  court  of  this  state. 

On  the  appeal  it  was  urged  that,  under  the  by-law  quoted,  plaintiff  was  entitled 
to  have  the  transfer  of  stock  made  on  the  books  of  the  company  in  accordance  with 
his  demand,  for  the  reason  that  an  assessment  in  excess  of  five  per  cent  was  pro- 
hibited by  the  general  act  of  March  26,  1866,  and  therefore  void,  unless  the  levy  of 
seventy-live  per  cent  was  justified  under  the  provisions  of  the  act  of  March  26,  1868, 
by  i lie  notification  by  the  insurance  commissioner  to  the  defendant  company,  to  repair 
its  capital  within  the  time  stated;  that  the  insurance  commissioner  had  not  complied 
with  the  requirements  of  the  latter  act  in  failing  to  revoke  his  certificate  of  authority 
and  to  advertise  the  insolvency  of  the  company;  and,  consequently,  his  acts  in  the 
premises,  and  the  levy  of  the  assessment  based  thereon,  were  unlawful  and  void. 

The  action  of  the  commissioner,  therefore,  was  the  sole  point  in  controversy.  In 
disposing  of  this  point  the  court  said  : 

It  was  objected  in  argument  upon  the  part  of  the  appellant,  that  the  requisition 
of  the  commissioner,  by  which  he  required  the  company  to  repair  their  capital  stock, 
and  in  assumed  obedience  to  which  the  company  levied  the  assessment  complained  of. 
was  itself  invalid  and  unauthorized  by  the  provisions  of  the  statute  already  referred 
to,  because  the  commissioner  did  not  then,  nor  at  any  time,  revoke  the  certificate  of 
authority  which  he  bad  previously,  under  section  4  of  the  statute,  granted  to  the  com- 
pany, authorizing  it  to  transact  insurance  business.  It  was  argued,  in  this  connection, 
ihat  the  phrase  'in  such  cases,"  occurring  in  section  8,  and  defining  the  cases  in 
which  such  a  requisition  is  authorized,  embraces  only  those  cases  in  which  the  com- 
missioner had  not  only  ascertained  the  fact  of  insolvency,  but  had  also  revoked  the 


116  INSURANCE   LAWS  OF    CALIFORNIA. 

certificate  itself.  It  was  said  that  the  language  employed  iii  the  statute  (section  8), 
is  mandatory  upon  the  commissioner,  that  whenever  he  shall  ascertain  the  fact  of 
insolvency,  he  shall,  and  is  hereby  empowered  to  revoke  "ihe  certificate  granted,"  etc. 
It  is  well  settled  that  in  the  construction  of  statutes,  for  the  purpose  of  ascertaining 
the  legislative  intent,  regard  is  to  be  had  not  so  much  to  the  exact  phraseology  in 
which  that  intent  has  been  expressed,  as  to  the  general  tenor  and  scope  of  the  entire 
legislative  scheme  embodied  in  the  act. 

Mere  philology  often  sticks  in  the  bark,  and  so  becomes  an  obstruction  rather  than 
an  aid  to  the  correct  exposition  of  the  meaning  of  the  statute.  The  act  under  con- 
sideration plainly  distinguishes  between  the  effect  of  a  revocation  notified  and  a 
requisition  received.  In  the  former  case  it  declares  that  the  company  shall  absolutely 
discontinue  the  taking  of  new  risks,  the  issuing  of  new  policies,  and  the  renewal  of 
old  ones.  ( Section  8. )  Such  revocation  deprives  the  company  of  the  certificate  of 
authority  which  (under  section  9)  it" must  possess  before  it  can  be  lawful  to  transact 
insurance  business  at  all,  "and  all  policies  issued  or  renewed,  and  all  insurance  taken 
before  the  issuance  of  such  certificate,  shall  be  null  and  void  for  all  purposes  what- 
soever." (Section  0.)  But  the  consequences  of  a  requisition  for  the  repair  of  capital 
stock  upon  insurance  business  transacted  intermediate  the  receipt  of  the  requisition 
and  the  expiration  of  the  time  therein  limited  are  widely  different  from  those  which 
ensue  upon  a  revocation  notified.  The  company  may,  of  course,  at  once  and  without 
delay,  supply  the  deficiency  in  its  capital  stock,  and  in  that  event  the  transaction  of 
its  business  is  wholly  unaffected  by  the  requisition  made.  Otherwise  it  may.  at  its 
option,  suspend  the  taking  of  insurances  and  the  issuance  of  new  policies  during  the 
time  limited  in  the  requisition ;  or.  if  it  prefer,  it  may  take  such  new  risks,  even 
before  the  deficiency  in  its  capital  stock  be  supplied,  the  directors  being  in  that  ease. 
however,  personally  liable  for  any  loss  which  may  occur  upon  such  new  risks  thus 
taken.  But  if  we  are  to  hold  that  in  every  case  where  a  requisition  to  repair  capital 
stock  is  received  a  revocation  must  first  be  notified,  it  is  obvious  that  the  revocation 
must  operate  to  utterly  destroy  the  privilege  plainly  acceded  to  the  company  inter- 
mediate the  receipt  of  the  mere  requisition  and  the  expiration  of  the  time  therein 
limited  for  making  the  required  repair  of  the  capital  stock.  A  construction  involving 
such  results  would  he  in  plain  conflict  with  the  apparent  intent  had  in  view  by  the 
statute.  There  are  other  considerations,  too.  which  present  themselves,  if  attention 
lie  had  to  the  general  scope  of  the  act  and  the  purpose  in  which  it  originated,  and 
which  confirm  us  in  the  view  we  have  expressed  upon  this  point. 

The  duties  imposed  upon  the  commissioner  of  insurance,  though  defined  in  a  gen- 
eral way,  are  in  their  nature  largely  discretionary,  and  depend  for  their  efficient  per- 
formance in  a  great  degree  upon  the  exercise  by  him  of  an  enlightened  and  careful 
discrimination  with  reference  to  the  circumstances  surrounding  each  particular  case 
with  which  he  is  expected  to  deal.  He  is  generally  to  do  and  perform,  with  justice 
and  impartiality,  the  duties  of  his  office  in  connection  with  the  laws  regulating  tin1 
business  of  insurance  in  this  state,  and  to  enforce  the  execution  of  such  laws  accord- 
ing to  the  true  intent  and  meaning  thereof  (section  4).  With  this  view  he  is  clothed 
with  important  powers,  to  be  exercised  to  a  greater  or  less  extent  according  as  the 
particular  circumstances  appearing  may,  in  his  judgment,  require.  It  may  be,  for 
instance,  that  an  insurance  company  is  ascertained  by  him  to  be  insolvent  in  fact 
and  in  a  commercial  sense,  and  the  risks  to  be  taken  by  such  a  company  therefore 
absolutely  worthless  to  the  assured.  In  such  a  case  it  may,  and  doubtless  would  be. 
his  duty  to  exert  the  high  authority  devolved  upon  him  by  law,  to  revoke  its  certificate 
at  once,  as  the  only  means  by  which  the  interests  of  the  public  could  be  preserved. 
Such  a  case  would,  however,  be  clearly  and  easily  distinguishable  from  another,  in 
which  there  was  found  to  be  only  the  technical  insolvency  defined  by  the  provisions 
of  the  statute  itself. 

For  it  will  be  observed  that  section  7  of  the  act  establishes  a  test  of  solvency  and 
insolvency  of  a  merely  arbitrary  character  and  under  the  operation  of  which  an  insur- 
ance company  may,  within  the  intent  and  for  the  purposes  of  the  statute,  be  held 
insolvent,  and  at  the  same  time  be  not  only  really  and  actually  solvent  in  a  business 
sense,  but  justly  so  regarded  in  the  commercial  world.  Thus,  in  order  to  ascertain 
the  p resent  condition  of  the  company  as  being  one  of  solvency  or  insolvency,  for  the 
mere  purposes  of  the  statute,  the  commissioner  must  assume,  against  the  condition  of 
solvency,  that  certain  losses,  though  yet  in  fact  only  reported,  are  already  established 
and  ascertained  ;  that  in  relation  to  outstanding  risks,  not  yet  heard  from  even  by 
report,  all  of  those  of  one  and  half  of  those  of  another  designated  class  will  eventually 
prove  to  be  losses ;  and  the  probable  losses  thereafter  to  be  sustained  upon  outstand- 
ing risks  of  yet  another  general  character  are  to  be  arrived  at  by  applying  the  rules 
<>f  calculation  in  such  cases  adopted  by  the  actuaries  in  the  states  of  New  York  and 
Massachusetts. 

If  under  the  provisions  of  the  statute  the  commissioner  should  determine,  upon  a 
proper  investigation  had,  that  the  company,  though  insolvent  within  the  intent  of 
the  act.  was,  nevertheless,  solvent  in  a  business  point  of  view,  we  should  be  surprised 
to  find,  and  we  do  not  find,  upon  examination  of  the  act,  that  he  had  no  discretion 
to  stop  with  the  delivery  of  the  requisition,  but  must  of  mere  legal  necessity,  resort 
to  the  harsher  measure  of  an  absolute  revocation  of  the  company's  certificate.  We 
would,  we  think,  greatly  misapprehend  the  scope  and  purpose  of  the  act  should  we 


GIVING    OF   BONDS.  117 

hold  that  under  its  provisions,  the  commissioner  is  to  exorcise  no  discretion  in  this 
most  important  respect,  biit  that,  being  once  put  in  motion,  lie  must  in  all  cases. 
nolens  volens,  proceed  to  the  same  and  a  uniform  extremity  against  all  companies 
with  whose  financial  condition  he  is  called  upon  to  deal,  and  that  he  can  not  legally 
require  a  company  to  merely  repair  its  capital,  even  in  a  case  where  such  repair  is  all 
that  is  needed,  but  must  first  revoke  its  certificate,  suspend,  and  perhaps  thereby 
nearly  destroy  its  business,  and  certainly  injure  its  general  credit  in  advance  by  an 
official  promulgation  of  his  judgment,  that  the  company  is  wholly  unfit  fee  transact 
business  at  all.  and  that  only  after  that  step  has  been  taken,  and  notice  thereof  "pub- 
lished in  some  public  newspaper  published  in  the  city  of  San  Francisco  for  at  least 
four  weeks."'  is  he  to  call  upoiv»the  company  to  repair  its  capital — if  it  can. 

Wo  think  that  such  an  interpretation  of  the  statute  would,  in  its  inevitable  con- 
sequences, involve  the  absolute  destruction  of  the  business  of  insurance,  instead  of 
regulating  its  transactions. 

Polachc  vs.  Pacific  Insurance  Co.,  42  Cal.  418. 


An  act  to  facilitate  the  giving  of  bonds  required  by  law. 
[Approved  March  12,  1SS5 ;  Stats.  1885,  p.  114.1 

The  people  of  the  State  of  California,  represented  in  s<  note  and  assem- 
bly, do  enact  as  follows: 

Section  1.  Whenever  any  person  who  now  or  hereafter  may  be 
required  or  permitted  by  law  to  make,  execute,  and  give  a  bond  or 
undertaking,  with  one  or  more  sureties,  conditioned  for  the  faithful  per- 
formance of  any  duty,  or  for  the  doing  or  not  doing  of  anything  in  said 
bond  or  undertaking  specified,  any  head  of  department,  board,  court, 
judge,  officer,  or  other  person  who  is  now  or  shall  hereafter  be  required 
to  approve  the  sufficiency  of  any  such  bond  or  undertaking,  or  the 
sureties  thereon,  may  accept  as  sole  and  sufficient  surety  on  such  bond 
or  undertaking,  any  corporation  incorporated  under  the  laws  of  any 
state  of  the  United  States  for  the  purpose  of  making  or  guaranteeing 
bonds  and  undertakings  required  by  law,  and  .which  shall  have  complied 
with  all  the  requirements  of  the  laws  of  this  state  regulating  the  admis- 
sion of  such  corporation  to  transact  such  business  in  this  state ;  and  all 
such  corporations  are  hereby  vested  with  full  power  and  authority  to 
make  and  guarantee  such  bonds  and  undertakings,  and  shall  be  subject 
1o  all  the  liabilities  and  entitled  to  all  the  rights  of  natural  persons 
sureties. 

Sec.  2.  It  is  further  provided  that  the  guaranty  of  any  such  com- 
pany shall  not  be  accepted  by  heads  of  departments  or  others,  as  pro- 
vided in  section  1  of  this  act,  whenever  its  liabilities  shall  exceed  its 
assets,  as  ascertained  in  the  manner  provided  in  section  3  of  this  act. 

Sec.  3.  Whenever  the  liabilities  of  any  such  company  shall  exceed 
its  assets,  the  insurance  commissioner  shall  require  the  deficiency  to  be 
paid  up,  within  sixty  days,  and  if  it  is  not  so  paid  up,  then  he  shall  issue 
;i  certificate  showing  the  extent  of  such  deficiency,  and  he  shall  publish 
the  same  once  a  week  for  three  weeks,  in  a  daily  San  Francisco  paper, 
and  thenceforth,  and  until  such  deficiency  is  paid  up,  such  company 
shrill  not  do  business  under  the  provisions  of  this  act.  And,  in  estimat- 
ing the  condition  of  any  such  company,  under  the  provisions  of  this  act, 
the  commissioner  shall  allow  as  assets  only  such  as  are  authorized  under 
existing  laws  at  the  time,  and  shall  charge  as  liabilities,  in  addition  to 
eighty  per  cent  of  the  capital  stock,  all  outstanding  indebtedness  of  the 
company,  and  a  premium  reserve  equal  to  fifty  per  centum  of  the  pre- 


118  INSURANCE   LAWS   OF   CALIFORNIA. 

miums  charged  by  said  company  on  all  risks  then  in  force.     Nothing 
herein  contained  shall  apply  to  bonds  given  in  criminal  cases. 
Sec.  4.     This  act  shall  take  effect  immediately. 

See  sections  1056-1057,  1057a,  Code  of  Civil  Procedure,  ante. 


An  act  to  require  the  payment  of  certain  premiums  to  counties  and  cities  and 
counties,  by  fire  insurance  companies  not  organized  under  the  laws  of  the 
State  of  California,  but  doing  business  therein,  and  providing  for  the  dispo- 
sition of  such  premiums. 

[Enacted,  Stats.  1885,  p.  13.    Amended,  Stats.  1887,  p.  13.] 

This  act  was  declared  unconstitutional  by  the  supreme  court  of  this 
state,  which  rendered  its  decision  to  that  effect  on  November  10,  1887. 

An  action  was  brought  to  recover  $441.36,  with  interest,  under  an  act  of  the  legis- 
lature, entitled  "An  act  to  require  the  payment  of  certain  premiums  to  counties  and 
cities  and  counties  by  fire  insurance  companies  not  organized  under  the  laws  of 
California,  but  doing  business  therein,  and  providing  for  the  disposition  of  such 
premiums,"  approved  March  3,  1885.  The  act  required  payment  of  one  per  cent  of 
the  premiums  of  such  companies  to  constitute  a  fund  to  be  known  as  the  firemen's 
relief  fund,  etc. 

It  was  claimed,  on  the  part  of  the  appellant,  that  the  act  created  a  tax  the  exaction 
of  which  was  illegal,  as  violative  of  section  12,  article  XI  of  the  state  constitution. 
Respondent  claimed  it  to  be  a  condition  upon  the  performance  of  which  foreign  cor- 
porations were  permitted  to  do  business  in  this  state.  The  court  took  the  former 
view,  and  reversed  the  judgment,  citing :  Barron  vs.  Burnside,  121  U.  S.  18G,  and 
Trustees  Exempt  Firemen's  Fund  vs.  Roome,  93  N.  Y.  325,  s.  c.  45  Am.  Rep.  217. 

San  Franciseo  vs.  Liverpool  and  London  and  Olobe  Insurance  Co.,  74  Cal.  113. 


An  act  to  provide  for  the  organization  and  management  of  county  fire  insur- 
ance companies. 

I  Approved  April  1,  1897;   Stats.  1897,  p.  439.     Amended  March  23,  1907;   Stats. 
1907,  p.  941.    Amended  April  15,  1909;  Stats.  1909,  p.  912.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 
Incorporation. 

Section  1.  Any  number  of  persons,  not  less  than  twenty-five,  resid- 
ing in  any  county  in  this  state,  owning  insurable  property  aggregating 
not  less  than  fifty  thousand  dollars  in  value,  which  they  desire  to  have 
insured,  may  incorporate  for  the  purpose  of  mutual  insurance  against 
loss  or  damage  by  fire. 

Filing  of  articles  of  incorporation — Certificate. 

Sec.  2.  Such  persons  shall  file  with  the  insurance  commissioner  a 
declaration  of  their  intention  to  incorporate  for  the  purposes  expressed 
in  section  one  of  this  act,  which  declaration  shall  be  signed  by  all  of  the 
incorporators,  and  shall  contain  a  copy  of  the  articles  of  incorporation 
proposed  to  be  adopted.  The  insurance  commissioner  shall  examine  the 
proposed  articles  of  incorporation,  and,  if  they  conform  to  this  act,  he 
shall  deliver  to  such  persons  a  certificate  permitting  them  to  incorporate 
as  such  insurance  company.  Such  certificate  shall  be  directed  to  the 
clerk  of  the  county  in  which  such  corporation  is  proposed  to  be  organ- 
ized, and  shall  contain  a  copy  of  the  proposed  articles  of  incorporation. 
Upon  filing  with  the  secretary  of  state  the  certified  copies  of  the  duly 
executed  articles  of  incorporation,  as  required  by  section  290  of  the 
Civil  Code  of  the  State  of  California,  and  of  the  certificate  above  pro-. 


COUNTY    FIRE    INSURANCE    COMPANIES.  119 

vided  for,  the  secretary  of  state  shall  thereupon  issue  a  certificate  of 
incorporation  to  such  county  insurance  company,  and,  upon  organizing 
under  such  articles  of  incorporation,  such  county  fire  insurance  com- 
pany may  carry  on  a  fire-insurance  business  as  hereinafter  provided. 
The  articles  of  incorporation  and  the  charter  or  certificate  obtained  by 
any  county  fire-insurance  company  operating  under  the  provisions  of 
this  act  shall  be  subject  to  the  control  and  modification  by  the  legislature 
of  the  State  of  California.  The  by-laws  and  all  amendments  thereto 
shall  be  filed  with  the  insurance  commissioner  within  sixty  (60)  days 
after  their  adoption. 

Directors. 

Sec.  3.  The  number  of  directors  shall  not  be  less  than  seven  (7), 
nor  more  than  eleven  (11),  a  majority  of  whom  shall  constitute  a 
quorum  to  do  business.  These  directors  shall  be  elected  from  the 
members  of  the  association  by  ballot,  and  shall  hold  office  for  one  year, 
or  until  their  successors  are  elected  and  qualified.  The  annual  meeting 
of  the  members  of  the  company  shall  be  on  the  second  Monday  in  Jan- 
uary of  each  year.  In  the  election  of  the  first  board  of  directors  each 
member  shall  be  entitled  to  one  vote.  At  every  subsequent  election, 
every  person  insured  shall  be  entitled  to  as  many  votes  as  there  are 
directors  to  be  elected,  and  an  equal  additional  number  for  every  risk  or 
risks  he  holds  in  the  company,  and  he  may  cast  the  same  in  person  or  by 
proxy,  distributing  them  among  the  directors  to  be  elected,  or  among  a 
!<ss  ii in nber  of  directors,  or  cumulating  them  upon  one  candidate,  as  he 
shall  see  fit. 

Officers. 

Sec.  4.  The  directors  shall  elect,  from  their  own  number,  a  presi- 
dent and  a  vice-president,  and  shall  also  elect  a  treasurer  and  a  secre- 
tary, who  may  or  may  not  be  members  of  the  company.  All  of  such 
officers  hold  their  office  for  one  year  from  the  date  of  their  election,  and 
until  their  successors  are  elected  and  qualified. 

Bonds. 

Seo.  5.  The  treasurer  and  secretary  shall  give  bonds  to  the  company 
for  the  faithful  performance  of  their  duties,  in  such  amounts  as  shall  be 
prescribed  by  the  board  of  directors. 

Powers — By-laws. 

Sec.  6.  Such  corporation  and  its  directors  shall  possess  the  usual 
powers,  and  be  subject  to  the  usual  duties  of  corporations  and  directors 
thereof,  and  may  make  such  by-laws,  not  inconsistent  with  the  constitu- 
tion and  the  laws  of  this  state,  as  may  be  deemed  necessary  for  the  man- 
agement of  its  affairs,  in  accordance  with  the  provisions  of  this  act. 
Also  to  prescribe  the  duties  of  its  officers  and  to  fix  their  compensation, 
and  to  alter  and  amend  its  by-laws,  when  necessary. 

Membership. 

Sec.  7.  Any  person  owning  property  in  the  county  for  which  any 
such  company  is  formed  or  any  person  owning  property  in  any  county 
adjoining  the  county  wherein  such  company  is  formed  as  hereinafter 
provided  may  become  ;i  member  of  such  company  by  insuring  therein, 
and   shall    be  entitled   to  all  the  rights  and  privileges  appertaining 


120  INSURANCE    LAWS   OP    CALIFORNIA. 

thereto;  and  no  person  not  residing  in  the  county  in  which  the  company 
is  formed  shall  become  a  director  of  such  company. 
Section  7  amended  March  23,  1907. 

Risks. 

Sec.  8.  Such  company  may  issue  policies  only  on  detached  dwell- 
ings, schoolhouses,  churches,  barns  (except  livery  barns  and  hotel 
barns),  and  other  farm  buildings,  and  such  property  as  may  be  con- 
tained therein;  also,  other  property  on  the  premises  owned  by  the 
insured;  hay  and  grain  in  stack  or  in  the  field  and  live  stock  on  the 
premises  of  the  insured,  anywhere  in  the  county,  for  any  time  not 
exceeding  five  years,  and  not  to  extend  beyond  the  time  limited  for  the 
existence  of  the  charter,  and  for  an  amount  not  to  exceed  four  thou- 
sand five  hundred  dollars  on  any  one  risk;  provided,  that  no  company 
which  has  been  organized  more  than  six  months  shall  write  insurance 
subject  to  one  fire  exceeding  three  per  cent  of  the  amount  of  risk  upon 
the  books  of  such  company.  All  persons  so  insured  shall  give  their  obli- 
gation to  the  company,  binding  themselves,  their  heirs  and  assigns,  to 
pay  their  pro  rata  share  to  the  company  of  the  necessary  expense  and  of 
loss  by  fire  which  may  be  sustained  by  any  member  thereof  during  the 
time  for  which  their  respective  policies  are  written,  and  they  shall  also 
at  the  time  of  effecting  the  insurance  pay  such  a  percentage  in  cash,  and 
such  other  charges,  as  may  be  required  by  the  rules  or  by-laws  of  the 
company. 

A  creamery  can  not  bv  insured  in  a  county  mutual.  It  is  not  "a  farm  building" 
within  the  terms  of  the  statute:  Opinion  of  the  Attorney  General.  November  7,  1907. 

Classifying  risks. 

Sec.  9.  All  such  companies  must  classify  the  property  insured 
therein  at  the  time  of  issuing  policies  thereon  under  different  rates. 
corresponding  as  nearly  as  may  be  to  the  greater  or  less  risk  from  fire 
loss  which  may  be  attached  to  the  several  kinds  of  property  insured. 

Limitations  upon  risks  taken. 

Sec.  10.  No  such  company  shall  insure  any  property  beyond  the 
limits  of  the  county  wherein  the  said  company  is  organized,  except  that 
a  company  may  insure  in  any  county  next  adjoining  the  county  wherein 
such  company  is  organized.  Nor  shall  any  such  company  issue  policies 
on  property  situated  within  the  corporate  limits  of  any  city  or  town  in 
excess  of  four  thousand  five  hundred  dollars  on  any  one  risk,  under  one 
or  more  policies.  No  adjoining  risks  can  be  taken  by  such  company 
unless  a  clear  space  of  at  least  one  hundred  and  fifty  feet  intervenes, 
and  such  intervening  space  must  continue  at  not  less  than  one  hundred 
feet  during  the  life  of  the  policy.  Nor  shall  any  risk  be  taken  on  any 
building  closer  than  one  hundred  feet  to  any  business  property,  provided 
the  amount  of  the  insurance  shall  not  exceed  seventy-five  per  cent  of 
the  value  of  the  property,  and  no  additional  insurance  shall  be  allowed. 

Section  amended  April  15,  1909;  in  effect  in  sixtv  davs.  Amended 
May  1,  1911.    Stats.  1911,  p.  1339. 

Adjustment  of  losses — Arbitration. 

Sec.  11.  Every  member  of  such  company  who  may  sustain  loss  or 
damage  by  fire  shall  immediately  notify  the  president,  or  in  his  absence, 
the  secretary  thereof,  stating  the  amount  of  damage  or  loss  sustained  or 


COUNTY   FIRE   INSURANCE   COMPANIES.  121 

claimed,  and  if  not  more  than  fifteen  hundred  dollars,  then  the  presi- 
dent and  secretary  shall  proceed  to  ascertain  the  amount  of  such  loss  or 
damage  and  adjust  the  same.  If  the  claim  for  damage  or  loss  be  for  an 
amount  greater  than  fifteen  hundred  dollars,  then  the  president  of  such 
company,  or  in  his  absence,  the  vice-president,  or  in  the  absence  of  both, 
the  secretary  thereof,  shall  forthwith  convene  the  board  of  directors  of 
such  company,  whose  duty  it  shall  be  when  convened,  to  appoint  a  com- 
mittee, of  not  less  than  three  disinterested  members  of  such  company,  to 
ascertain  the  amount  of  such  damage  or  loss.  If  in  either  case  there  is 
a  failure  of  the  parties  to  agree  upon  the  amount  of  such  damage  or 
loss  they  may  submit  the  question  of  the  amount  of  such  loss  to  arbitra- 
tion,  and  in  that  event  the  president  of  the  company  shall  appoint  one 
disinterested  person  to  aet  as  an  arbitrator,  and  the  claimant  or  insured 
shall  appoint  another,  and  if  such  two  arbitrators  fail  to  agree  upon  the 
amount  of  such  loss,  then  they  shall  select  a  third  disinterested  person 
to  act  with  them,  and  such  arbitrators  so  appointed  shall  have  full 
authority  to  examine  witnesses  and  to  do  all  other  things  necessary  to 
the  proper  determination  of  the.  amount  of  loss  sustained  by  the  claim- 
ant, and  shall  make  their  award  in  writing  to  the  president  of  the  com- 
pany, and  to  the  insured,  and  such  award  so  as  aforesaid  made,  shall  be 
final  as  to  the  amount  of  the  loss  sustained.  The  pay  of  said  committee 
shall  be  three  dollars  per  day  for  each  day's  services  so  rendered,  and 
five  cents  for  each  mile  necessarily  traveled  in  the  discharge  of  their 
(hit  ies.  which  shall  be  paid  by  the  claimant  unless  the  award  of  such  com- 
mittee shall  exceed  the  sum  offered  by  the  company  in  liquidation  of 
such  loss  or  damage,  in  which  case  such  expense  shall  be  paid  by  the 
company. 

Section  11  amended  April  15,  1909;  in  effect  in  sixty  days. 

Assessments  for  deficiency. 

SlBC.  12.  When  the  amount  of  any  loss  shall  have  been  ascertained, 
which  exceeds  in  amount  the  cash  funds  of  the  company,  the  president 
shall  convene  the  directors  of  said  company,  who  shall  make  an  assess- 
ment upon  all  the  property  to  the  amount  for  which  each  several  piece 
of  property  is  insured,  taken  in  connection  with  the  rate  of  premium 
under  which  it  may  he  classified;  provided,  further,  that  the  board  of 
directors  tcvq.j  at  their  annual  meeting  levy  an  assessment  not  to  exceed 
twenty-five  cents  on  the  one  hundred  dollars  on  first-class  insurance  and 
a  pro  rata  amount  on  other  classes  and  said  sum  so  raised  shall  consti- 
tute a  reserve  fund  to  be  used  in  emergency  cases  only  and  another 
assessment  for  this  fund  shall  not  be  made  while  this  reserve  remains 
intact. 

Section  12  amended  March  23,  1907. 

Notice  of  assessment. 

Sec.  13.  It  shall  be  the  duty  of  the  secretary,  whenever  such  an 
;is-essment  shall  have  been  made,  to  immediately  notify  every  person 
holding  a  risk  in  such  company,  personally,  by  an  agent,  or  by  letter 
directed  to  his  usual  post-office  address,  of  the  amount  of  such  loss,  and 
the  sum  due  from  him,  as  his  share  thereof,  and  of  the  time  and  to 
whom  such  payment  is  to  he  made;  but  such  time  shall  not  be  less  than 
thirty  days,  nor  more  than  ninety  days  from  the  date  of  such  notice. 


122  INSURANCE    LAWS   OF    CALIFORNIA. 

Action  for  neglect  or  refusal  to  pay  assessment. 

Sec.  14.  An  action  may  be  brought  against  any  member  of  such 
company  who  shall  neglect  or  refuse  to  pay  any  assessment  made  upon 
him  by  the  provisions  of  this  act,  or  other  liabilities  due  the  company, 
and  the  directors  of  any  company  so  formed  who  shall  wilfully  refuse 
or  neglect  to  perform  the  duties  imposed  upon  them  by  law  or  by  the 
by-laws  of  the  company  shall  be  liable  in  their  individual  capacity  to 
the  person  sustaining  such  loss.  An  action  may  also  be  brought  and 
maintained  against  any  such  company  by  members  thereof  for  lasses 
sustained  if  payment  is  withheld  after  the  amount  of  such  losses  have 
been  determined,  and  is  due  by  the  terms  of  the  policy. 

Annual  statement. 

Sec.  15.  It  shall  be  the  duty  of  the  secretary  to  prepare  an  annual 
statement  showing  the  condition  of  such  company  on  the  thirty-first  day 
of  December,  and  present  the  same  at  the  annual  meeting. 

Withdrawal. 

Sec.  16.  Any  member  of  such  company  may  withdraw  therefrom  by 
surrendering  his  policy  for  cancellation  at  any  time  while  the  organiza- 
tion continues  the  business  for  which  it  was  organized,  by  giving  notice1 
in  writing  to  the  secretary  thereof,  and  paying  his  share  of  all  claims 
that  may  exist  against  such  company ;  provided,  that  the  company  shall 
have  power  to  cancel  or  terminate  any  policy  by  giving  the  insured  five 
days'  written  notice  to  that  effect,  and  returning  to  him  any  excess  of 
premium  he  may  have  paid  during  the  term  of  the  policy,  over  the 
cost  of  his  insurance,  as  measured  by  the  rates  of  standard  fire  insur- 
ance companies  doing  business  in  this  state. 

Report  of  officers. 

Sec.  17.  It  shall  be  the  duty  of  the  president  and  secretary  within 
thirty  days  after  the  first  day  of  January  in  each  year,  to  prepare, 
under  their  own  oath,  and  transmit  to  the  insurance  commissioner,  a 
statement  of  the  condition  of  the  company  on  the  last  day  of  the  month 
next  preceding  the  annual  meeting.  If.  upon  examination,  the  insur- 
ance commissioner  finds  that  such  company  is  doing  business  correctly, 
in  accordance  with  the  provisions  of  this  act.  he  shall  thereupon  furnish 
the  company  his  certificate,  whicli  shall  be  deemed  authority  to  continue 
business  during  the  ensuing  year,  subject,  however,  to  the  provisions  of 
this  act.  For  such  examination  and  certificate  the  company  shall  pay 
one  dollar.  Each  company  shall  pay  at  the  time  of  organization,  five 
dollars  to  the  insurance  commissioner,  for  all  services  which  he  shall 
render  in  the  matter  of  organization. 

Dissolution. 

Sec.  18.  Any  such  company  may  be  proceeded  against  and  dissolved 
in  the  manner  and  upon  the  same  conditions  as  provided  in  case  of  other 
insurance  companies  incorporated  in  this  state. 

Conflicting  laws  repealed. 

Sec.  1!).     AH  acts  and  parts  of  acts  in  conflict  with  this  act  are  hereby 

repealed. 

Count v  mui u nls  are  corporations,  and  are  subject  to  the  insurance  tax  provided  by 
section  14,  article  13  of  the  constitution :  Opinion  of  the  Attorney  General  Map  24, 
1911. 


MUTUAL   FIRE   INSURANCE    COMPANIES.  123 

While  county  mutuals  do  not  charge  regular  premiums,  in  lieu  thereof,  their  mem- 
bers are  assessed  to  meet  losses  as  well  as  sufficient  to  cover  expenses.  It  is  clearly  a 
method  of  collecting  sufficient  funds  to  carry  on  the  business  of  the  company,  and 
whether  the  payments  be  termed  premiums  or  assessments,  they  are  used  for  the  same 
purpose,  and  I  am,  therefore,  of  the  opinion  that  the  total  amount  received  by  such 
county  mutuals  should  be  considered  as  gross  premiums  and  deductions  should  be 
made  therefrom  in  accordance  with  the  constitutional  provisions :  Opinion  of  the 
Attorney  General,  May  21f,  1911. 


An  act  providing  for  the  organization  and  management  of  mutual  fire  insur- 
ance corporations  and  associations  and  defining  the  same,  and  regulating  the 
transaction  of  the  business  of  mutual  fire  insurance  in  the  State  of  Cali- 
fornia, and  repealing  an  act  entitled  "An  act  providing  for  the  organization 
and  management  of  mutual  fire  insurance  companies,"  approved  March  19, 
1907. 

[Approved  May  1,  1911;  Stats.  1911,  p.  1342.] 

Tht  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Section  1.  Private  corporations  or  associations  may  be  formed  for  a 
term  to  be  stated  in  their  articles  not  exceeding  fifty  years  for  the  pur- 
nose  of  insuring  the  property  of  their  members  against  loss  or  damage 
by  fire  in  accordance  with  this  act,  and  not  otherwise. 

Sec.  2.  The  trustees  or  directors  of  any  corporation  or  association 
shall  adopt  such  by-laws  not  in  conflict  with  the  laws  of  this  state,  as 
they  may  deem  proper  for  the  government  of  its  affairs  and  the  conduct 
of  its  business.  Such  by-laws  shall  provide  for  the  liability  of  its  mem- 
bers in  accordance  with  the  provisions  of  this  act. 

Sec.  3.  Each  person  or  partnership  or  corporation  accepting  a  policy 
in  any  such  mutual  insurance  corporation  or  association  shall  thereby 
become  a  member  of  such  corporation  or  association  and  shall  be  liable 
for  his  proportionate  share  of  losses  and  operating  expenses  as  herein- 
after provided. 

Sec.  4.  No  policy  shall  be  issued  by  any  such  corporation  or  asso- 
ciation until  not  less  than  five  hundred  thousand  (500,000)  dollars  of 
insurance  in  not  less  than  five  hundred  separate  risks  have  been  sub- 
scribed for  and  are  entered  upon  its  books,  nor  until  it  has  collected 
from  insurance  premiums,  and  then  has  on  hand  not  less  than  ten  thou- 
sand (10,000)  dollars  in  cash  oyer  and  above  all  liabilities  other  than 
reinsurance  reserve  as  specified  in  section  13  of  this  act,  and  also  con- 
tingent funds  consisting  of  the  liability  of  its  members  liable  to  assess- 
ment, *in  addition  to  cash  premiums  collected,  amounting  to  not  less  than 
fifty  thousand  (50,000)  dollars,  such  liability  to  be  shown  in  the  signed 
applications  of  its  members. 

Sec.  5.  The  expenses  including  commissions  and  fees  to  agents  and 
officers  of  any  calendar  year  of  any  such  corporation  or  association 
organized  or  operating  under  this  act  shall  be  limited  to  thirty  per  cent 
of  what  is  left  of  the  gross  premiums  actually  received  during  that  year 
after  deducting  from  such  premiums  the  return  premiums  and  reinsur- 
ance paid  out  by  or  for  which  the  corporation  or  association  has  become 
liable  during  the  year.  A  violation  of  this  provision  shall  render  the 
officers  and  directors  and  all  persons  having  similar  powers  jointly  and 
severally  Liable  to  such  company  for  any  amount  used  for  expenses  in 
excess  of  the  amount  provided  for  in  this  section.     In  the  event  that 


124  INSURANCE   LAWS   OP   CALIFORNIA. 

such  company  fails  or  refuses  to  recover  such  moneys  so  paid  the  insur- 
ance commissioner  may  sue  for  and  recover  the  same  from  any  one  or  all 
of  the  officers  or  directors  and  all  persons  having  similar  powers  of  such 
company  for  the  benefit  of  its  policyholders.  No  officer  or  other  person 
whose  duty  it  is  to  determine  the  character  of  the  risks,  and  upon  whose 
decision  the  application  shall  be  accepted  or  rejected  by  such  corpora- 
tion shall  receive  as  any  part  of  his  compensation  a  commission  upon  the 
premiums,  but  his  compensation  shall  be  a  fixed  salary  and  such  share  of 
the  net  profits  as  the  directors,  and  all  persons  having  similar  powers 
may  determine. 

Sec.  6.  Such  corporation  or  association  may  issue  policies  for  a  term 
not  exceeding  fire  years;  provided,  the  term  of  any  policy  does  not 
exceed  the  time  limited  for  the  existence  of  the  charter  or  articles  of  asso- 
ciation. No  policy  or  policies  shall  be  for  an  amount  in  excess  of  twenty- 
five  hundred  (2500)  dollars  on  any  one  risk,  unless  protected  by  rein- 
surance in  companies  having  sufficient  assets  and  surplus  to  entitle  such 
companies  to  be  permitted  to  do  business  in  the  State  of  California ;  pro- 
vided, however,  that  one  thousand  (1000)  dollars  additional  insurance 
may  be  written  on  any  one  risk  for  each  million  dollars  of  total  insurance 
outstanding  on  the  books  of  the  corporation  or  association  in  excess  of 
one  million  dollars;  provided,  further,  that  two  or  more  buildings  sit- 
uated in  the  same  city  block,  or  separated  by  less  than  one  hundred  feet 
shall  be  deemed  to  be  one  risk. 

Sec.  7.  Any  mutual  fire  insurance  corporation  or  association  without 
subscribed  capital  or  guarantee  fund  organized  under  the  laws  of  sonic 
other  state  desiring  to  transact  business  in  this  state  shall  file  with  the 
insurance  commissioner  its  last  financial  statement,  showing  its  condi- 
tion on  December  thirty-first,  next  preceding  the  date  of  its  application 
for  admission,  signed  by  its  president  and  secretary  under  oath,  and 
showing  that  it  is  possessed  of  cash  assets  of  not  less  than  two  hun- 
dred thousand  (200,000;  dollars,  of  which  not  less  than  fifty  thousand 
(50,000)  dollars  shall  be  net  cash  surplus  over  and  above  all  liabilities, 
including  its  reinsurance  reserve  as  provided  in  section  13  of  this  act. 
Also  a  certificate  from  the  insurance  commissioner  of  the  state  in  which 
said  corporation  or  association  is  incorporated,  certifying  that  in  the 
judgment  of  the  state  insurance  commissioner  the  statement  is  correct 
and  that  the  corporation  or  association  is  possessed  of  two  hundred 
thousand  (200,000)  dollars  cash  assets,  of  which  not  less  than  fifty 
thousand  (50,000)  dollars  is  such  net  cash  surplus.  The  insurance  com- 
missioner of  this  state  upon  receipt  and  examination  of  such  statement 
and  certificate  and  upon  satisfying  himself  of  the  correctness  thereof 
and  of  compliance  with  the  law  of  this  state  applicable  as  shown  by  this 
act  shall  issue  to  such  corporation  or  association  a  certificate  of  authority 
granting  it  full  power  to  transact  business  under  this  act. 

Sec.  8.  Each  policyholder  shall  be  liable  to  pay  his  proportionate 
share  of  any  assessment  which  may  be  levied  by  any  such  corporation  or 
association  and  in  accordance  with  the  law  and  his  contract,  on  account 
of  losses  and  expenses  incurred  while  he  is  a  member.  Any  such  cor- 
poration or  association  shall  charge  and  collect  upon  its  policies  the  full 
premium  in  cash,  and  may  in  its  by-laws,  fix  the  liability  of  its  members 
for  the  payment  of  the  losses  and  expenses  not  provided  for  by  its  cash 
funds;  provided,  that  the  liability  of  a  member  to  assessment  shall  not 


MUTUAL   FIRE   INSURANCE    COMPANIES.  125 

be  less  than  the  amount  of  one  annual  premium  in  addition  to  the  annual 
cash  premium  of  his  policy;  provided,  however,  that  corporations  or 
associations  which  have  accumulated  in  the  regular  course  of  the  busi- 
ness, cash  assets  of  not  less  than  two  hundred  thousand  (200,000)  dol- 
lars of  which  not  less  than  fifty  thousand  (50,000)  dollars  is  net  cash 
surplus  over  and  above  all  the  requirements  of  section  13  of  this  act  shall 
have  power,  while  in  that  condition,  to  adopt  by-laws  limiting  the  lia- 
bility of  its  policyholders  for  loss  or  damage  by  fire  to  any  amount  it 
may  desire  to  specify  in  its  policies,  and  the  power  to  issue  policies  with 
such  limitation  of  liability  to  continue  only  during  the  time  such  corpo- 
ration or  association  is  in  such  financial  condition;  provided,  further, 
that  every  such  corporation  or  association  must  print  upon  its  policies 
such  by-laws  or  mutual  conditions  as  will  define  the  liability  of  a  policy- 
holder. 

Sec.  9.  Whenever  such  corporation  or  association  is  not  possessed  of 
cash  funds  above  its  reinsurance  reserve  fund  and  all  other  liabilities 
sufficient  for  the  payment  of  accrued  losses  it  shall  make  an  assessment 
for  the  amount  needed  to  pay  such  losses  and  expenses,  upon  its  mem- 
bers liable  to  assessment  therefor  in  proportion  to  their  several  liabili- 
ties. The  corporation  or  association  shall  cause  to  be  recorded  in  a  book 
kept  for  that  purpose  the  order  of  such  assessment,  together  with  a 
statement  which  shall  sit  forth  the  condition  of  the  corporation  or 
association  at  the  date  of  the  order,  the  amount  of  its  cash  assets  and 
•  ••'iitingent  funds  Liable  to  assessment  and  the  amount  of  the  assessment 
'•ailed  for.  Such  record  shall  be  made  and  signed  by  the  directors  or 
other  persons  who  voted  for  the  order,  before  any  part  of  the  assessment 
is  collected,  and  any  person  liable  to  assessment  may  inspect  and  take 
a  copy  of  the  same. 

Sec.  10.  Any  member  of  any  such  corporation  or  association  may 
withdraw  ;it  any  time  by  surrendering  his  policy  or  certificate  of  insur- 
ance to  the  corporation  or  association  and  giving  thirty  days'  written 
notice  of  his  intention  to  withdraw  and  by  paying  his  share  of  all  losses 
which  shall  have  accrued  by  the  end  of  the  time  specified  in  the  notice, 
and  of  all  losses  arising  out  of  fires  occurring  theretofore  and  all  losses 
occurring  within  thirty  days  after  the  service  of  such  notice  and  all 
assessments  levied  in  whole  or  in  part  to  meet  such  losses,  and  all  assess- 
ments due,  accrued  or  pending  at  the  time  of  the  cancellation  of  his 
policy,  but  the  corporation  or  association  may  retain  the  customary  short 
rate  for  the  expired  time;  provided,  also,  that  the  corporation  shall  have 
power  to  cancel  or  determine  any  policy  by  giving  the  insured  five 
days'  written  notice  to  that  effect,  and  returning  to  the  insured  his  pro 
rata  of  the  unearned  premium. 

Sec.  11.  No  corporation  or  association  formed  under  this  act  may 
make  any  dividend  except  from  profits  in  hand  after  retaining  unim- 
paired, a  cash  surplus  of  fifty  thousand  (50,000)  dollars  over  and 
above  all  liabilities  including  reinsurance  reserve  and  shall  thereafter 
retain  not  less  than  five  per  cent  per  annum  of  all  profits  available  for 
dividends  until  the  sum  of  two  hundred  thousand  dollars  ($200,000.00) 
ae1  cash  surplus  has  been  accumulated.  Such  cash  surplus  shall  be 
invested  in  the  manner  provided  for  in  subdivisions  1,  2,  3  and  4  of 
section  421  of  the  Civil  Code  of  the  State  of  California  as  that  section 
was  amended  by  acl  approved  March  22,  1907. 


126  INSURANCE   LAWS   OF    CALIFORNIA. 

Sec.  12.  Any  corporation  or  association  organized  or  operating 
under  this  act  shall  file  with  the  insurance  commissioner  on  or  before 
the  first  day  of  March  of  each  year,  its  financial  statement  exhibiting 
its  condition  on  the  thirty-first  day  of  December  next  preceding.  Such 
statement  shall  be  made  as  provided  for  in  the  blanks  furnished  by  the 
insurance  department. 

Sec.  13.  Whenever  the  liabilities  of  any  corporation  or  association 
operating  under  this  act  for  losses  reported,  expenses,  taxes,  reinsurance 
reserve  upon  all  unexpired  fire  risks  running  one  year  or  less  from  date 
of  policy  at  fifty  (50)  per  cent,  and  upon  all  unexpired  fire  risks  run- 
ning more  than  one  year  from  date  of  policy  to  be  estimated  pro  rata, 
are  greater  than  its  admitted  cash  assets,  or  whenever  the  available 
resources  of  any  company  are  less  than  the  requirements  under  section  4 
of  this  act,  then  such  company  or  association  is  insolvent. 

Sec.  14.  The  general  provisions  applicable  to  all  corporations  as 
expressed  in  part  four,  division  first  of  the  Civil  Code  of  the  State  of 
California  and  all  provisions  contained  in  sections  595,  596,  596a,  597, 
598,  599,  603,  604,  605,  606,  607,  608,  609,  610,  611,  612,  615,  616,  617, 
618,  619,  620,  621,  622,  623,  627,  631,  631a,  632,  633,  634a,  6346  of  the 
Political  Code  of  the  State  of  California,  and  sections  435  and  439  of 
the  Penal  Code  of  the  State  of  California,  and  section  388  of  the  Code 
of  Civil  Procedure  of  the  State  of  California,  also  section  415  of  the 
Civil  Code  of  the  State  of  California,  and  all  other  laws  of  the  state 
relating  to  fire  insurance,  in  so  far  as  any  section  or  law  herein  referred 
to  is  not  inconsistent  with  or  in  conflict  with  the  provisions  of  this  act, 
are  hereby  made  to  apply  to  all  corporations  or  associations  operating 
under  this  act;  provided,  nothing  herein  shall  relieve  such  corporations 
or  associations  from  full  compliance  with  the  provisions  of  section  14  of 
article  XIII  of  the  constitution  of  the  State  of  California  and  of  all 
statutes  enacted  in  aid  thereof. 

Sec.  15.  This  act  shall  not  apply  to  contracts  made  between  persons, 
firms  or  corporations,  of  this  state,  and  others  of  this  state  and  other 
states  for  the  protection  of  their  own  property  under  the  plan  known 
as  reciprocal  or  interinsurance,  nor  to  unincorporated  interindemnity 
compacts. 

Sec.  16.  Nothing  in  this  act  shall  be  construed  to  restrict  or  affect 
the  provisions  of  an  "Act  to  provide  for  the  organization  and  manage- 
ment of  county  fire  insurance  companies,"  approved  April  1,  1897. 

Sec.  17.  That  certain  act  of  the  legislature  of  the  State  of  Cali- 
fornia, entitled  "An  act  providing  for  the  organization  and  manage- 
ment of  mutual  fire  insurance  companies"  (approved  March  19,  1907) 
is  hereby  repealed. 


An  act  relating  to  life,  health  and  accident  insurance  of  live  stock  on  the 
assessment  plan  and  the  conduct  of  the  business  of  such  insurance. 

[Approved  March  23,  1907;  Stats.  1907,  p.  962.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Contract  of  mutual  insurance  of  animals  defined. 

Section  1.     Every  contract  whereby  a  benefit  may  accrue  to  a  party 
or  parties  therein  named  upon  the  death  or  physical  disability  of  an 


LIVE    STOCK   INSURANCE.  127 

animal  insured  thereunder,  or  for  the  payment  of  any  sums  of  money 
dependent  in  any  degree  upon  the  collection  of  assessments  or  dues 
from  owners  holding  similar  contracts,  shall  be  deemed  a  contract  of 
mutual  insurance  upon  the  assessment  plan.  Such  contracts  must  show 
that  the  liabilities  of  the  insured  thereunder  are  not  limited  to  fixed 
premiums. 

How    corporations    may    be    formed — Investments — Condition    precedent    to 
issuing  insurance. 

Sec.  2.  Corporations  may  be  formed  under  the  general  laws  of  this 
state  to  carry  on  the  business  of  mutual  live  stock  insurance  upon  the 
assessment  plan,  and  shall  be  subject  only  to  the  provisions  of  this  act. 
No  such  corporation  shall  issue  contracts  of  insurance  until  at  least  two 
hundred  (200)  persons  owning  live  stock  have  applied,  in  writing,  for 
membership  or  insurance  therein,  and  have  paid  to  the  treasurer  of  such 
corporation  the  sum  of  five  thousand  (5,000)  dollars.  This  sum  shall 
be  invested  in  bonds  or  securities,  approved  by  the  insurance  commis- 
sioner of  this  state,  or  deposited  in  some  bank  in  this  state  where  it  will 
earn  interest.  Said  bonds  or  securities  or  evidences  of  such  deposit, 
shall  be  placed,  through  the  insurance  commissioner  of  this  state,  with 
the  state  treasurer,  and  the  principal  sum  shall  be  held  in  trust  for  the 
contract  holders  of  such  corporation,  with  the  right  in  the  corporation 
to  exchange  said  bonds,  securities,  or  evidence  of  bank  deposit  for  others 
of  like  value.  Such  corporations  shall  also,  as  a  condition  precedent  to 
issuing  any  contracts  of  insurance,  obtain  the  written  certificate  of  the 
insurance  commissioner  that  it  has  complied  with  the  requirements  of 
this  act ;  and  that  the  name  of  the  corporation  is  not  the  same  as  that  of 
any  other  corporation  of  this  or  other  states.  ;is  indicated  by  the  insur- 
ance department  reports  in  his  office ;  nor  shall  the  commissioner  approve 
any  name  or  title  so  closely  resembling  another  as  to  mislead  the  public. 
No  corporation  formed  hereunder  shall  have  legal  existence  after  one 
year  from  the  date  of  its  articles,  unless  its  organization  has  been  com- 
pleted, and  business  commenced;  nor  shall  any  corporation  or  individual 
solicit,  or  cause  to  be  solicited,  any  business,  until  such  corporation  shall 
have  complied  with  the  provisions  of  section  633  of  the  Political  Code 
of  this  state. 

What  contracts  of  insurance  shall  specify. 

Sec.  3.  The  contracts  of  insurance  issued  by  such  corporation  shall 
specify  the  sum  or  sums  to  be  paid  upon  the  happening  of  the  contin- 
gen<  y  insured  against,  and  when  such  payments  will  be  made.  Unless 
the  contract  shall  have  been  invalidated  by  fraud  or  by  breach  of  its 
conditions,  the  corporation  shall  be  obligated  to  pay  the  beneficiary  the 
amount  or  amounts  specified  in  its  contract  at  the  time  or  times  therein 
named,  and  such  indebtedness  shall  be  a  lien  upon  all  the  property  of 
such  corporation,  with  priority  over  all  indebtedness  thereafter  incurred, 
except  as  hereinafter  provided  in  case  of  insolvency.  Failure  to  make 
such  payment  within  thirty  days  after  notice,  at  the  home  office,  by  mail, 
as  provided  by  law,  of  final  judgment,  unless  waiver  is  made  by  the 
beneficiary,  shall  constitute  a  forfeiture  of  the  right  to  do  business. 

Reserve  fund  required. 

Sec.  4.  Every  domestic  corporation  organized  or  doing  business 
under  this  act  shall  accumulate  a  reserve  or  emergency  fund,  which 


128  INSURANCE   LAWS   OF   CALIFORNIA. 

shall  at  all  times  be  not  less  than  the  largest  benefit  contracted  to  be 
paid  by  it  to  any  one  person.  Every  existing  domestic  corporation  mnst 
accumulate  such  fund  within  one  year  from  the  date  when  this  act  takes 
effect,  and  any  corporation  organized  hereunder  within  one  year  from 
the  date  of  its  certificate  of  incorporation.  Such  fund,  to  the  extent  of 
the  largest  amount  contracted  to  be  paid  by  any  such  corporation  to  any 
one  person,  shall  be  so  invested  and  deposited,  as  provided  in  section  two 
hereof,  with  the  right  in  the  corporation  to  exchange  any  such  securities 
for  others  of  equal  value.  The  deposit  required  by  section  two  of  this 
act  shall  constitute  a  part  of  the  reserve  required  by  this  section,  at  the 
option  of  such  corporation.  When  any  corporation  doing  business  here- 
under shall  discontinue  business,  this  fund  shall  be  returned  to  such 
corporation,  or  so  disposed  of  as  may  be  determined  by  the  superior 
court  of  the  county,  or  city  and  county,  in  which  is  its  principal  place 
of  business. 

Foreign  corporations,  conditions  required. 

Sec.  5.  Corporations  organized  under  the  laws  of  any  other  state  or 
country  to  transact  the  business  of  mutual  assessment  or  live  stock 
insurance,  must,  as  a  condition  precedent  to  transacting  business  in  this 
state,  deposit  with  the  insurance  commissioner  of  this  state  a  certified 
copy  of  its  charter,  or  other  instrument,  required  by  its  home  author- 
ities; a  statement,  under  oath,  of  its  president  or  secretary,  of  its  busi- 
ness for  the  preceding  year,  in  such  form  as  may  be  required  by  the 
insurance  commissioner  of  this  state;  an  appointment  of  a  general 
agent,  service  upon  whom  shall  bind  the  corporation;  a  certificate  that 
for  the  next  preceding  twelve  months  it  has  paid,  in  full,  the  maximum 
amount  named  in  its  contracts  of  insurance ;  a  certificate  from  the 
proper  officer  of  its  state  or  government  that  like  corporations  of  this 
state  are  legally  entitled  to  do  business  in  such  state  or  country ;  copies 
of  its  contracts  of  insurance  and  applications,  which  must  show  that  the 
liabilities  of  its  members  are  not  limited  to  fixed  premiums;  and  evi- 
dence, satisfactory  to  the  insurance  commissioner,  that  the  corporation 
lias  accumulated  a  fund  equal  to  that  required  of  like  corporations  in 
this  state  constituting  a  reserve  or  surplus  fund  held  in  trust  for  the 
benefit  of  its  contract  holders,  and  so  invested  and  held  as  required  by 
the  laws  of  the  state  or  government  under  which  such  corporation  was 
organized.  The  insurance  commissioner  shall  thereupon  issue  a  license 
to  such  corporation  to  do  business  in  this  state.  This  license  must  be 
renewed  annually,  and  may  be  revoked  whenever  it  is  ascertained  that 
the  statements  required  to  be  made  by  this  section  are  not  true.  Upon 
such  revocation,  notice  thereof  shall  be  given  by  the  insurance  com- 
missioner, by  publication  in  some  newspaper  published  in  the  city  and 
county  of  San  Francisco,  for  two  weeks,  daily,  and  no  new  contracts 
shall  be  made  by  such  company  in  this  state.  When  any  other  state  or 
country  imposes  any  additional  license,  fees,  taxes,  or  penalties  upon 
any  corporation  organized  or  doing  business  under  this  act,  like  license, 
fees,  taxes,  or  penalties  shall  be  imposed  upon  corporations  of  the  same 
kind,  and  their  agents,  of  such  state  or  country  doing  business  in  this 
state. 


LIVE   STOCK  INSURANCE.  129 

Limitations  of  contract — Applications  for  insurance — Penalty  for  false  state- 
ments. 

Sec.  6.  No  corporation  doing  business  under  this  act  (except  acci* 
dent  or  casualty  corporations)  shall  issue  a  contract  of  insurance  upon 
the  life  of  any  animal  after  it  has  passed  its  fifteenth  birthday.  Every 
such  contract  of  insurance  shall  be  founded  upon  written  application 
therefor,  and  (except  when  the  application  is  for  health,  accident,  or 
casualty  insurance  only,  or  for  one  hundred  dollars  life  insurance,  or 
less)  such  application  shall  be  accompanied  by  the  report  of  a  reputable 
veterinarian,  containing  a  detailed  statement  of  his  examination  of  the 
animal,  and  showing  the  animal  to  be  in  good  health,  and  recommend- 
ing the  issuance  of  a  contract  of  insurance.  Any  solicitor,  agent, 
employee,  examining  veterinarian,  or  other  person  making  a  false  or 
fraudulent  statement  to  any  corporation  doing  business  under  this  act, 
with  reference  to  any  application  for  insurance,  or  for  the  purpose  of 
obtaining  any  money  or  benefit  from  such  corporation,  shall  be  guilty  of 
a  misdemeanor,  and  upon  conviction  shall  be  punished  by  a  fine  of  not 
Less  than  one  hundred  dollars  nor  more  than  five  hundred  dollars,  or  by 
imprisonment  in  the  county  jail  for  not  less  than  thirty  days  nor  more 
than  one  year,  or  by  both  such  fine  and  imprisonment,  in  the  discretion 
of  the  court;  and  any  person  who  shall  make  a  false  statement  of  any 
material  fact  or  thing  in  a  sworn  statement  as  to  the  death  or  disability 
of  an  animal  of  the  contract  holder  in  any  such  corporation,  for  the  pur- 
pose of  procuring  or  aiding  the  beneficiary  or  beneficiaries,  or  contract 
holder,  in  procuring  the  payment  of  a  benefit  named  in  the  contract, 
shall  be  guilty  of  perjury,  and  may  be  proceeded  against  and  punished 
as  provided  "by  the  statutes  of  this  state  in  relation  to  the  crime  of 
perjury. 

Benefits  not  liable  to  attachment. 

Sec.  7.  The  money,  benefit,  annuities,  endowment,  charity,  relief,  or 
aid  to  be  paid  as  provided  by  the  contracts  issued  by  any  corporation 
doing  business  under  this  act,  shall  not  be  liable  to  attachment  or  other 
process,  and  shall  not  be  seized,  taken,  appropriated,  or  applied  by  any 
legal  or  equitable  process,  nor  by  operation  of  law,  to  pay  any  debts  or 
liability  of  the  contract  holder,  or  any  beneficiary  named  thereunder. 

Annual  statement  to  be  filed. 

Sec.  8.  Every  domestic  and  foreign  corporation  doing  business 
under  this  act,  shall  annually,  on  or  before  the  first  day  of  February, 
file  with  the  insurance  commissioner,  in  such  form  as  he  shall  prescribe, 
a  statement  of  its  affairs  for  the  year  ending  on  the  preceding  thirty- 
first  day  of  December.  The  insurance  commissioner,  in  person  or  by 
< I iily  authorized  deputy,  shall  have  the  power  of  examination  into  the 
affairs  of  any  domestic  corporation  doing  business  or  claiming  to  do 
business  under  this  act,  at  any  time,  in  his  discretion,  and  shall  make 
such  examination  at  least  once  a  year. 

When  corporation  may  have  license  revoked. 

Sec.  9.  If  the  insurance  commissioner,  after  examination  of  the 
affairs  of  a  corporation,  shall  find  that  such  corporation  is  not  doing  its 
business  in  conformity  to  this  act,  or  that  it  is  doing  a  fraudulent  or 

9 — IL 


130  INSURANCE   LAWS   OF   CALIFORNIA. 

unlawful  business,  or  that  it  is  not  carrying  out  its  terms  of  contract,  or 
that  it  can  not  within  three  months  from  the  date  of  notice  of  default 
pay  its  obligations,  he  shall  cite  the  president,  secretary,  manager,  or 
general  agent  of  said  corporation,  or  all  of  them,  to  appear  before  him 
(stating  the  time  and  place)  to  show  cause  why  the  authority  of  such 
corporation  to  do  business  shall  not  be  revoked;  and  if  they  can  not 
show  cause,  then  he  shall  report  the  facts  to  the  attorney  general  of  this 
state,  who  shall  commence  proceedings  in  the  proper  court  to  restrain 
said  corporation  from  doing  any  further  business. 

Assessments,  notice  of  to  be  mailed. 

Sec.  10.  No  policy  or  certificate  issued  by  any  corporation  or  asso- 
ciation doing  business  under  the  provisions  of  this  act  shall  lapse  or  be 
lapsed  for  the  non-payment  of  any  assessment,  dues,  or  premiums,  unless 
the  corporation  or  association  has  first  mailed  to  the  insured  under  such 
policj'  or  certificate,  at  his  or  her  last  given  post-office  address,  a  notice 
setting  forth  the  amount  to  be  paid,  and  the  time  the  same  is  due  and 
payable ;  and  such  notice  shall  be  mailed  at  least  fifteen  days  before  the 
assessment  is  due  (provided  that  such  corporations  doing  business  under 
this  act  as  collect  specific  amounts  at  specific  dates,  as  contained  in  the 
contract,  shall  not  be  compelled  to  send  such  notices),  and  an  affidavit 
made  by  the  officer,  bookkeeper,  or  clerk  of  any  such  corporation  having 
cliarge  of  the  mailing  of  notices,  setting  forth  the  facts  as  they  appear 
on  the  records  in  the  office  of  the  said  corporation,  showing  that  such 
notice  was  mailed  and  the  date  of  mailing,  shall  constitute  conclusive 
evidence  o*f  the  mailing  of  such  notice. 

Fees  for  filing  statements,  etc. 

Sec.  12.  The  fees  for  filing  statements,  certificates,  or  other  docu- 
ments required  by  this  act,  or  for  any  service  or  act  of  the  insurance 
commissioner,  and  the  penalties  for  any  violation  of  this  act,  shall, 
except  as  otherwise  provided  herein,  be  the  same  as  provided  in  the  laws 
of  this  state  relating  to  life  insurance  companies,  and  shall  be  disposed 
of  as  provided  by  such  law. 

Expenses  of  insurance  commissioner,  how  paid. 

Sec.  13.  And  for  all  lawful  expenses  under  this  act,  or  by  reason  of 
any  of  its  provisions,  in  the  prosecution  of  any  suit  or  proceedings,  or 
otherwise,  for  the  enforcement  of  the  provisions  of  this  act,  the  insur- 
ance commissioner  must  present  bills  duly  certified  by  him,  and  accom- 
panied with  vouchers,  to  the  state  board  of  examiners,  who  must  allow 
the  same,  and  direct  payment  thereof  to  be  made;  and  the  state 
controller  shall  draw  warrants  therefor  on  the  state  treasurer  for  the 
payment  of  the  same  to  the  insurance  commissioner,  in  addition  to  the 
ordinary  contingent  expenses,  which  warrant  shall  be  payable  out  of  the 
general  fund. 
Time  act  shall  take  effect. 

Sec.  14.     This  act  shall  take  effect  immediately. 


FRATERNAL   BENEFIT    SOCIETIES.  131 

An  act  for  the  regulation  and  control  of  fraternal  benefit  societies. 
[Approved  May  1,  1911;  Stats.  1911,  p.  1320.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Section  1.  Fraternal  benefit  societies  defined.  Any  corporation, 
society,  order  or  voluntary  association,  without  capital  stock,  organized 
and  carried  on  solely  for  the  mutual  benefit  of  its  members  and  their 
beneficiaries,  and  not  for  profit,  and  having  a  lodge  system  with  ritual- 
istic form  of  work  and  representative  form  of  government,  and  which 
shall  make  provision  for  the  payment  of  benefits  in  accordance  with 
seel  ion  5  hereof,  is  hereby  declared  to  be  a  fraternal  benefit  society. 

Sec.  2.  Lodge  system  <l<  fined.  Any  society  having  a  supreme  gov- 
erning or  legislative  body  and  subordinate  lodges  or  branches  by  what- 
ever name  known,  into  which  members  shall  be  elected,  initiated  and 
admitted  in  accordance  with  its  constitution,  laws,  rules,  regulations, 
and  prescribed  ritualistic  ceremonies,  which  subordinate  lodges  or 
branches  shall  be  required  by  the  laws  of  such  society  to  hold  regular  or 
stated  meetings  at  least  once  in  each  month,  shall  be  deemed  to  be  oper- 
ating on  the  lodge  system. 

Sec.  3.  Representative  form  of  government  defined.  Any  such 
society  shall  be  deemed  to  have  a  representative  form  of  government 
when  it  shall  provide  in  its  constitution  and  laws  for  a  supreme  legisla- 
tive or  governing  body,  composed  of  representatives  elected  either  by 
the  members  or  by  delegates  elected  directly  or  indirectly  by  the  mem- 
bers, together  with  such  other  members  as  may  be  prescribed  by  its  con- 
stitution and  laws;  provided,  that  the  elective  members  shall  constitute 
a  majority  in  number  and  have  not  less  than  two  thirds  of  the  votes,  nor 
less  than  the  votes  required  to  amend  its  constitution  and  laws;  and 
provided,  further,  that  the  meetings  of  the  supreme  or  governing  body, 
and  the  election  of  officers,  representatives  or  delegates  shall  be  held  as 
often  as  once  in  four  years.  The  members,  officers,  representatives  or 
delegates  of  a  fraternal  benefit  society  shall  not  vote  by  proxy. 

Sec.  4.  Exemptions.  Except  as  herein  provided,  such  societies  shall 
be  governed  by  this  act  and  shall  be  exempt  from  all  provisions  of  the 
insurance  laws  of  this  state,  not  only  in  governmental  relations  with  the 
state,  but  for  every  other  purpose,  and  no  law  hereafter  enacted  shall 
apply  to  them,  unless  they  be  expressly  designated  therein. 

Sec.  5.  Benefits.  Subsection  1.  Every  society  transacting  business 
under  this  act  shall  provide  for  the  payment  of  death  benefits,  and  may 
provide  for  the  payment  of  benefits  in  case  of  temporary  or  permanent 
physical  disability,  either  as  the  result  of  disease,  accident  or  old  age; 
provided,  the  period  of  life  at  which  the  payment  of  benefits  for  dis- 
ability on  account  of  old  age  shall  commence,  shall  not  be  under  seventy 
years,  and  may  provide  for  monuments  or  tombstones  to  the  memory 
of  its  deceased  members  and  for  the  payment  of  funeral  benefits.  Such 
society  shall  have  the  power  to  give  a  member,  when  permanently  dis- 
abled or  on  attaining  the  age  of  seventy,  all  or  such  portion  of  the  face 
value  of  his  certificate  as  the  laws  of. the  society  may  provide;  provided, 
that  nothing  in  this  act  contained  shall  be  so  construed  as  to  prevent  the 
Issuing  of  benefit  certificates  for  a  term  of  years  less  than  the  whole  of 


132  INSURANCE   LAWS   OF   CALIFORNIA. 

life  which  are  payable  upon  the  death  or  disability  of  the  member  occur- 
ring within  the  term  for  which  the  benefit  certificate  may  be  issued. 
Such  society  shall,  upon  written  application  of  the  member,  have  the 
power  to  accept  a  part  of  the  periodical  contributions  in  cash,  and 
charge  the  remainder,  not  exceeding  one  half  of  the  periodical  contri- 
bution, against  -the  certificate  with  interest  payable  or  compounded 
annually  at  a  rate  not  lower  than  four  per  cent  per  annum;  provided, 
that  this  privilege  shall  not  be  granted  except  to  societies  which  have 
readjusted  or  may  hereafter  readjust  their  rates  of  contributions  and 
to  contracts  affected  by  such  readjustment. 

Subsection  2.  Any  society  which  shall  show  by  the  annual  valuation 
hereinafter  provided  for  that  it  is  accumulating  and  maintaining  the 
reserve  necessary  to  enable  it  to  do  so,  under  a  table  of  mortality  not 
lower  than  the  American  Experience  Table  and  four  per  cent  interest 
may  grant  to  its  members,  extended  and  paid-up  protection  or  such 
withdrawal  equities  as  its  constitution  and  laws  may  provide ;  provided, 
that  such  grants  shall  in  no  case  exceed  in  value  the  portion  of  the 
reserve  to  the  credit  of  such  members  to  whom  they  are  made. 

Sec.  6.  Beneficiaries.  The  payment  of  death  benefits  shall  be  con- 
fined to  wife,  husband,  relative  by  blood  to  the  fourth  degree,  father-in- 
law,  mother-in-law,  son-in-law,  daughter-in-law,  stepfather,  stepmother, 
stepchildren,  children  by  legal  adoption,  or  to  a  person  or  persons 
dependent  upon  the  member ;  provided,  that  if  after  the  issuance  of  the 
original  certificate  the  member  shall  become  dependent  upon  an  incor- 
porated charitable  institution,  he  shall  have  the  privilege  with  the  con- 
sent of  the  society,  to  make  such  institution  his  beneficiary.  Within  the 
above  restrictions  each  member  shall  have  the  right  to  designate  his  bene- 
ficiary, and,  from  time  to  time,  have  the  same  changed  in  accordance 
with  the  laws,  rules  or  regulations  of  the  society,  and  no  beneficiary 
shall  have  or  obtain  any  vested  interest  in  the  said  benefit  until  the 
same  has  become  due  and  payable  upon  the  death  of  the  said  member; 
provided,  that  any  society  may,  by  its  laws,  limit  the  scope  of  benefici- 
aries within  the  above  classes. 

Sec.  7.  Qualifications  for  membership.  Any  society  may' admit  to 
beneficial  membership  any  person  not  less  than  sixteen  and  not  more 
than  sixty  years  of  age,  who  has  been  examined  by  a  legally  qualified 
physician  and  whose  examination  has  been  supervised  and  approved  in 
accordance  with  the  laws  of  the  society ;  provided,  that  any  beneficiary 
member  of  such  society  who  shall  apply  for  a  certificate  providing  for 
disability  benefits,  need  not  be  required  to  pass  an  additional  medical 
examination  therefor.  Nothing  herein  contained  shall  prevent  such 
society  from  accepting  general  or  social  members. 

Sec.  8.  Certificate.  Every  certificate  issued  by  any  such  society 
shall  specify  the  amount  of  benefit  provided  thereby,  and  shall  provide 
that  the  certificate,  the  charter  or  articles  of  incorporation,  or,  if  a  vol- 
untary association,  the  articles  of  association,  the  constitution  and  laws 
of  the  society  and  the  application  for  membership  and  medical  examina- 
tion, signed  by  the  applicant,  and  all  amendments  to  each  thereof,  shall 
constitute  the  agreement  between  the  society  and  the  member,  and  copies 
of  the  same  certified  by  the  secretary  of  the  society,  or  corresponding 
officer,  shall  be  received  in  evidence  of  the  terms  and  conditions  thereof 


FRATERNAL   BENEFIT    SOCIETIES.  133 

and  any  changes,  additions  or  amendments  to  said  charter  or  articles  of 
incorporation,  or  articles  of  association,  if  a  voluntary  association,  con- 
stitution or  laws  duly  made  or  enacted  subsequent  to  the  issuance  of  the 
benefit  certificate  shall  bind  the  member  and  his  beneficiaries,  and  shall 
govern  and  control  the  agreement  in  all  respects  the  same  as  though 
such  changes,  additions  or  amendments  had  been  made  prior  to  and 
were  in  force  at  the  time  of  the  application  for  membership. 

Sec.  9.  Funds.  Subsection  1.  Any  society  may  create,  maintain, 
invest,  disburse  and  apply  an  emergency,  surplus  or  other  similar  fund 
in  accordance  with  its  laws.  Unless  otherwise  provided  in  the  contract, 
such  funds  shall  be  held,  invested,  and  disbursed  for  the  use  and  benefit 
of  the  society,  and  no  member  or  beneficiary  shall  have  or  acquire  indi- 
vidual rights  therein  or  become  entitled  to  any  apportionment  or  the 
surrender  of  any  part  thereof,  except  as  provided  in  subsection  2  of 
section  5  of  this  act.  The  funds  from  which  benefits  shall  be  paid  and 
the  funds  from  which  the  expenses  of  the  society  shall  be  defrayed,  shall 
be  derived  from  periodical  or  other  payments  by  the  members  of  the 
society  and  accretions  of  said  funds;  provided,  that  no  society,  domestic 
or  foreign,  shall  hereafter  be  incorporated  or  admitted  to  transact  busi- 
ness in  this  state,  which  does  not  provide  for  stated  periodical  contribu- 
tions sufficient  to  provide  for  meeting  the  mortuary  obligations  con- 
tracted, when  valued  upon  the  basis  of  the  National  Fraternal  Congress 
Table  of  Mortality  as  adopted  by  the  National  Fraternal  Congress, 
A i must  23,  1899,  or  any  higher  standard  with  interest  assumption  not 
more  than  four  per  cent  per  annum,  nor  write  or  accept  members  for 
temporary  or  permanent  disability  benefits  except  upon  tables  based 
upon  reliable  experience,  with  an  interest  assumption  not  higher  than 
four  per  cent  per  annum.  . 

Subsection  2.  Deferred  payments  or  installments  of  claims  shall  be 
considered  as  fixed  liabilities  on  the  happening  of  the  contingency  upon 
which  such  payments  or  installments  are  thereafter  to  be  paid.  Such 
liability  shall  be  the  present  value  of  such  future  payments  or  install- 
ments upon  the  rate  of  interest  and  mortality  assumed  by  the  society 
for  valuation,  and  every  society  shall  maintain  a  fund  sufficient  to  meet 
suck  liability  regardless  of  proposed  future  collections  to  meet  any  such 
liabilities. 

Sec.  10.  Investments.  Every  society  shall  invest  its  funds  only  in 
securities  permitted  by  the  laws  of  this  state  for  the  investment  of  the 
assets  of  life  insurance  companies;  provided,  that  any  foreign  society 
permitted  or  seeking  to  do  business  in  this  state,  which  invests  its  funds 
in  accordance  with  the  laws  of  the  state  in  which  it  is  incorporated,  shall 
be  held  to* meet  the  requirements  of  this  act  for  the  investment  of  funds. 

Sec.  11.  Distribution  of  funds.  Every  provision  of  the  laws  of  the 
society  for  payment  by  members  of  such  society,  in  whatever  form  made, 
shall  distinctly  state  the  purpose  of  the  same  and  the  proportion  thereof 
which  may  be  used  for  expenses,  and  no  part  of  the  money  collected  for 
mortuary  or  disability  purposes  or  the  net  accretions  of  either  or  any 
of  said  funds  shall  be  used  for  expenses. 

Sec.  12.  Organization.  Seven  or  more  persons,  citizens  of  the 
United  States,  and  a  majority  of  whom  are  citizens  of  this  state,  who 
desire  to  form  a  fraternal  benefit  society,  as  defined  by  this  act,  may 
make  and  sign  (giving  their  addresses)  and  acknowledging  before  some 


134  INSURANCE   LAWS   OF   CALIFORNIA. 

officer  competent  to  take  acknowledgment  of  deeds,  articles  of  incorpo- 
ration, in  which  shall  be  stated : 

First — The  proposed  corporate  name  of  the  society,  which  shall  not 
so  closely  resemble  the  name  of  any  society  or  insurance  company 
already  transacting  business  in  this  state  as  to  mislead  the  public  or  to 
lead  to  confusion. 

Second — The  purpose  for  which  it  is  formed — which  shall  not  include 
more  liberal  powers  than  are  granted  by  this  act;  provided,  that  any 
lawful  social,  intellectual,  educational,  charitable,  benevolent,  moral  or 
religious  advantages  may  be  set  forth  among  the  purposes  of  the  society 
-  -and  the  mode  in  which  its  corporate  powers  are  to  be  exercised. 

Third — The  names,  residences  and  official  titles  of  all  the  officers, 
trustees,  directors  or  other  persons  who  are  to  have  and  exercise  the  gen- 
eral control  and  management  of  the  affairs  and  funds  of  the  society  for 
the  first  year  or  until  the  ensuing  election  at  which  all  such  officers  shall 
be  elected  by  the  supreme  legislative  or  governing  body  which  election 
shall  be  held  not  later  than  one  year  from  the  date  of  the  issuance  of  the 
permanent  certificate. 

Such  articles  of  incorporation  and  duly  certified  copies  of  the  consti- 
tution and  laws,  rules  and  regulations,  and  copies  of  all  proposed  forms 
of  benefit  certificates,  applications  therefor  and  circulars  to  be  issued  by 
such  society,  and  a  bond  in  the  sum  of  five  thousand  dollars,  with  sureties 
approved  by  the  insurance  commissioner  conditioned  upon  the  return  of 
the  advanced  payments,  as  provided  in  this  section,  to  applicants,  if  the 
organization  is  not  completed  within  one  year,  shall  be  filed  with  the 
insurance  commissioner,  who  may  require  such  further  information  as 
he  deems  necessary,  and  if  the  purposes  of  the  society  conform  to  the 
requirements  of  this  act,  and  all  provisions  of  law  have  been  complied 
with  the  insurance  commissioner,  shall  so  certify  and  retain  and  file  the 
articles  of  incorporation,  and  furnish  the  incorporators  a  preliminary 
certificate  authorizing  said  society  to  solicit  members  as  hereinafter  pro- 
vided. Upon  receipt  of  said  certificate  from  the  insurance  commissioner 
said  society  may  solicit  members  for  the  purpose  of  completing  its  organ- 
ization and  shall  collect  from  each  applicant  the  amount  of  not  less  than 
one  regular  monthly  payment,  in  accordance  with  its  table  of  rates  as 
provided  by  its  constitution  and  laws,  and  shall  issue  to  each  such  appli- 
cant a  receipt  for  the  amount  so  collected.  But  no  such  society  shall 
incur  any  liability  other  than  for  such  advanced  payments,  nor  issue  any 
benefit  certificate  nor  pay  or  allow,  or  offer  or  promise  to  pay  or  allow, 
to  any  person  any  death  or  disability  benefit  until  actual  bona  fide  appli- 
cations for  death  benefit  certificates  have  been  secured  upon  at^least  five 
hundred  lives  for  at  least  one  thousand  dollars  each,  and  all  such  appli- 
cants for  death  benefits  shall  have  been  regularly  examined  by  legally 
qualified  practicing  physicians,  and  certificates  of  such  examinations 
have  been  duly  filed  and  approved  by  the  chief  medical  examiner  of  such 
society,  nor  until  there  shall  be  established  ten  subordinate  lodges  or 
branches  into  which  said  five  hundred  applicants  have  been  initiated, 
nor  until  there  has  been  submitted  to  the  insurance  commissioner,  under 
oath  of  the  president  and  secretary,  or  corresponding  officers  of  such 
society,  a  list  of  such  applicants,  giving  their  names,  addresses,  date 
examined,  date  approved,  date  initiated,  name  and  number  of  the  subor- 
dinate branch  of  which  each  applicant  is  a  member,  amount  of  benefits 


,  FRATERNAL   BENEFIT    SOCIETIES.  135 

to  be  granted,  rate  of  stated  periodical  contributions  which  shall  be  suffi- 
cient to  provide  for  meeting  the  mortuary  obligation,  contracted,  when 
valued  for  death  benefits  upon  the  basis  of  the  National  Fraternal  Con- 
gress Table  of  Mortality,  as  adopted  by  the  National  Fraternal  Congress 
August  23,  1899,  or  any  higher  standard  at  the  option  of  the  society, 
and  for  disability  benefits  by  tables  based  upon  reliable  experience  and 
for  combined  death  and  permanent  total  disability  benefits  by  tables 
based  upon  reliable  experience,  with  an  interest  assumption  not  higher 
than  four  per  cent  per  annum,  nor  until  it  shall  be  shown  to  the  insur- 
ance commissioner  by  the  sworn  statement  of  the  treasurer,  or  corre- 
sponding officer  of  such  society,  that  at  least  five  hundred  applicants 
have  each  paid  in  cash  at  least  one  regular  monthly  payment  as  herein 
provided  per  one  thousand  dollars  of  indemnity  to  be  affected,  which 
payments  in  the  aggregate  shall  amount  to  at  least  twenty-five  hundred 
dollars,  all  of  which  shall  be  credited  to  the  mortuary  or  disability  fund 
on  account  of  such  applicants,  and  no  part  of  which  may  be  used  for 
expenses.  Said  advanced  payments  shall,  during  the  period  of  organiza- 
t  ion  be  held  in  trust,  and,  if  the  organization  is  not  completed  within  one 
year  as  hereinafter  provided,  returned  to  said  applicants.  The  insur- 
ance commissioner  may  make  such  examination  and  require  such  further 
information  as  he  deems  advisable,  and  upon  presentation  of  satisfac- 
tory  evidence  that  the  society  has  complied  with  all  the  provisions  of  law 
lie  shall  issue  to  such  society  a  certificate  to  that  effect.  Such  certificate 
shall  be  prima  facie  evidence  of  the  existence  of  such  society  at  the  date 
of  such  certificate.  The  insurance  commissioner  shall  cause  a  record  of 
such  certificate  to  be  made  and  a  certified  copy  of  such  record  may  be 
given  in  evidence  with  like  effect  as  the  original  certificate.  No  prelim- 
inary certificates  granted  under  the  provisions  of  this  section  shall  be 
valid  after  one  year  from  its  date,  or  after  such  further  period,  not 
exceeding  one  year,  as  may  be  authorized  by  the  insurance  commissioner 
upon  cause  shown,  unless  the  five  hundred  applicants  herein  required 
have  been  secured  and  the  organization  has  been  completed  as  herein 
provided,  and  the  articles  of  incorporation  and  all  proceedings  there- 
under shall  become  null  and  void  in  one  year  from  the  date  of  said  pre- 
liminary certificate,  or  at  the  expiration  of  said  extended  period,  unless 
such  society  shall  have  completed  its  organization  and  commenced  busi- 
ness ns  herein  provided.  When  any  domestic  society  shall  have  dis- 
continued business  for  the  period  of  one  year,  or  has  less  than  four 
hundred  members,  its  charter  shall  become  null  and  void.  Every  such 
society  shall  have  the  power  to  make  a  constitution  and  by-laws  for  the 
government  of  the  society,  the  admission  of  its  members,  the  manage- 
ment of  its  affairs  and  the  fixing  and  readjusting  of  the  rates  of  con- 
tribution  of  its  members  from  time  to  time;  and  it  shall  have  the  power 
to  change,  alter,  add  to  or  amend  such  constitution  and  by-laws  and  shall 
have  such  other  powers  as  are  necessary  and  incidental  to  carrying  into 
effect  the  objects  and  purposes  of  the  society. 

Sec.  13.  Powers  retained;  reincorporation ;  amendments.  Any  so- 
ciety now  engaged  in  transacting  business  in  this  state  may  exercise, 
after  the  passage  of  this  act,  all  of  the  rights  conferred  thereby,  and  all 
of  the  rights,  powers  and  privileges  now  exercised  or  possessed  by  it 
under  its  charter  or  articles  of  incorporation  not  inconsistent  with  this 
act.  it'  incorporated;  or,  if  it  be  a  voluntary  association,  it  may  incorpo- 


136  INSURANCE   LAWS   OF   CALIFORNIA. 

t 

rate  hereunder.  But  no  society  already  organized  shall  be  required  to 
reincorporate  hereunder,  and  any  such  society  may  amend  its  articles  of 
incorporation  from  time  to  time  in  the  manner  provided  therein  or  in 
its  constitution  and  laws  and  all  such  amendments  shall  be  filed  with  the 
insurance  commissioner,  and  shall  become  operative  upon  such  filing, 
unless  a  later  time  be  provided  in  such  amendments  or  in  its  articles  of 
incorporation,  constitution  or  laws. 

Sec.  14.  Mergers  and  transfers.  No  domestic  society  shall  merge 
with  or  accept  the  transfer  of  the  membership  or  funds  of  any  other 
society  unless  such  merger  or  transfer  is  evidenced  by  a  contract  in 
writing,  setting  out  in  full  the  terms  and  conditions  of  such  merger  or 
transfer,  and  filed  with  the  insurance  commissioner  of  this  state,  together 
with  a  sworn  statement  of  the  financial  condition  of  each  of  said  societies, 
by  its  president  and  secretary,  or  corresponding  officers,  and  a  certificate 
of  such  officers,  duly  verified  under  oath  of  said  officers  of  each  of  the 
contracting  societies,  that  such  merger  or  transfer  has  been  approved 
by  a  vote  of  two  thirds  of  the  members  of  the  supreme  legislative  or 
governing  body  of  each  of  said  societies.  Upon  the  submission  of  said 
contract,  financial  statements  and  certificates,  the  insurance  commis- 
sioner shall  examine  the  same,  and,  if  he  shall  find  such  financial  state- 
ments to  be  correct  and  the  said  contract  to  be  in  conformity  with  the 
provisions  of  this  section,  and  that  such  merger  or  transfer  is  just  and 
equitable  to  the  members  of  each  of  said  societies,  he  shall  approve 
said  merger  or  transfer,  issue  his  certificate  to  that  effect  and  thereupon 
the  said  contract  of  merger  or  transfer  shall  be  of  full  force  and  effect. 
In  case  such  contract  is  not  approved,  the  fact  of  its  submission  and  its 
contents  shall  not  be  disclosed  by  the  insurance  commissioner. 

Sec.  15.  Annual  license.  Societies  which  are  now  authorized  to 
transact  business  in  this  state  may  continue  such  business  until  the  first 
day  of  July  next  succeeding  the  passage  of  this  act,  and  the  authority 
of  such  societies  may  thereafter  be  renewed  annually,  but  in  all  cases 
to  terminate-on  the  first  day  of  the  succeeding  July;  provided,  however, 
the  certificate  of  authority  shall  continue  in  full  force  and  effect  until 
the  new  certificate  of  authority  be  issued  or  specifically  refused.  For 
each  such  certificate  of  authority  or  renewal  the  society  shall  pay  the 
insurance  commissioner  ten  dollars.  A  duly  certified  copy  or  duplicate 
of  such  certificate  of  authority  shall  be  prima  facie  evidence  that  the 
licensee  is  a  fraternal  benefit  society  within  the  meaning  of  this  act. 

Sec.  16.  Admission  of  foreign  society.  No  foreign  society  now 
transacting  business,  organized  prior  to  the  passage  of  this  act,  which  is 
not  now  authorized  to  transact  business  in  this  state,  shall  transact  any 
business  herein  without  a  certificate  of  authority  from  the  insurance 
commissioner.  Any  such  society  shall  be  entitled  to  a  certificate  of 
authority  to  transact  business  within  this  state  upon  filing  with  the 
insurance  commissioner  a  duly  certified  copy  of  its  charter  or  articles 
of  association;  a  copy  of  its  constitution  and  laws,  certified  by  its  sec- 
retary or  corresponding  officer,  a  power  of  attorney  to  the  insurance 
commissioner  as  hereinafter  provided ;  a  statement  of  its  business  under 
oath  of  its  president  and  secretary,  or  corresponding  officers,  in  the  form 
required  by  the  insurance  commissioner,  duly  verified  by  an  examinar*  :>n 
made  by  the  supervising  insurance  official  of  its  home  state  or  other 
state  satisfactory  to  the  insurance  commissioner  of  this  state ;  a  certifi- 
cate from  the  proper  official  in  its  home  state,  province  or  country  that 


FRATERNAL    BENEFIT    SOCIETIES.  137 

the  society  is  legally  organized ;  a  copy  of  its  contract,  which  must  show 
that  benefits  are  provided  for  by  periodical,  or  other  payments  by,  per- 
sons holding  similar  contracts,  and  upon  furnishing  the  insurance  com- 
missioner such  other  information  as  he  may  deem  necessary  to  a  proper 
exhibit  of  its  business  and  plan  of  working  and  upon  showing  that  its 
assets  are  invested  in  accordance  with  the  laws  of  the  state,  territory, 
district,  province  or  country  where  it  is  organized,  he  shall  issue  a  cer- 
tificate of  authority  to  such  society  to  do  business  in  this  state  until  the 
first  day  of  the  succeeding  July  and  such  certificate  of  authority  shall, 
upon  compliance  with  the  provisions  of  this  act,  be  renewed  annually, 
but  in  all  cases  to  terminate  on  the  first  day  of  the  succeeding  July ; 
provided,  however,  that  certificate  of  authority  shall  continue  in  full 
force  and  effect  until  the  new  certificate  of  authority  be  issued  or 
specifically  refused.  Any  foreign  society  desiring  admission  to  this  state 
shall  have  the  qualifications  required  of  domestic  societies  organized 
under  this  act  and  have  its  assets  invested  as  required  by  the  laws  of  the 
state,  territory,  district,  country,  or  province  where  it  is  organized. 
For  each  such  certificate  or  renewal  the  society  shall  pay  the  insurance 
commissioner  twenty  dollars.  When  the  insurance  commissioner  refuses 
to  issue  a  certificate  of  authority  to  any  society,  or  revokes  its  certificate 
of  authority  to  do  business  in  this  state,  he  shall  reduce  his  ruling,  order 
or  decision  to  writing  and  file  the  same  in  his  office,  and  shall  furnish 
a  copy  thereof,  together  with  a  statement  of  his  reasons,  to  the  officers 
of  the  society,  upon  request,  and  the  action  of  the  insurance  commis- 
sioner shall  be  reviewable  by  proper  proceedings  in  any  court  of  com- 
petent jurisdiction  within  the  state;  provided,  however,  that  nothing 
contained  in  this  or  the  preceding  section  shall  be  taken  or  construed  as 
preventing  any  such  society  from  continuing  in  good  faith  all  contracts 
made  in  this  state  during  the  time  such  society  was  legally  authorized 
to  transact  business  herein. 

Sec.  17.  Power  of  attorney  and  service  of  process.  Every  society, 
whether  domestic  or  foreign,  now  transacting  business  in  this  state  shall, 
within  thirty  days  after  the  passage  of  this  act,  and  every  such  society 
hereafter  applying  for  admission,  shall,  before  being  licensed,  appoint 
in  writing  the  insurance  commissioner  and  his  successors  in  office  to  be 
its  true  and  lawful  attorney,  upon  whom  all  legal  process  in  any  action 
or  proceeding  against  it  shall  be  served,  and  in  such  writing  shall  agree 
that  any  lawful  process  against  it  which  is  served  upon  such  attorney 
shall  be  of  the  same  legal  force  and  validity  as  if  served  upon  the  society 
and  that  the  authority  shall  continue  in  force  so  long  as  any  liability 
remains  outstanding  in  this  state.  Copies  of  such  appointment,  certified 
by  said  insurance  commissioner  shall  be  deemed  sufficient  evidence 
thereof  and  shall  be  admitted  in  evidence  with  the  same  force  and  effect 
as  the  original  thereof  might  be  admitted.  Service  shall  only  be  made 
upon  such  attorney,  must  be  made  in  duplicate  upon  the  insurance  com- 
missioner or  in  his  absence  upon  the  person  in  charge  of  his  office  and 
slmll  be  deemed  sufficient  service  upon  such  society;  provided,  however, 
that  no  such  service  shall  be  valid  or  binding  against  any  such  society 
when  it  is  required  thereunder  to  file  its  answer,  pleading  or  defense  in 
less  than  thirty  days  from  the  date  of  mailing  the  copy  of  such  service 
t<>  such  society.     When  legal  process  against  any  such  society  is  served 


138  INSURANCE   LAWS   OF   CALIFORNIA. 

upon  said  insurance  commissioner  he  shall  forthwith  forward  by  regis- 
tered mail  one  of  the  duplicate  copies  prepaid  and  directed  to  its  secre- 
tary or  corresponding  officer.  Legal  process  shall  not  be  served  upon 
any  such  society  except  in  the  manner  provided  herein. 

Sec.  18.  Place  of  meeting;  location  of  office.  Any  domestic  society 
may  provide  that  the  meetings  of  its  legislative  or  governing  body  may 
be  held  in  any  state,  district,  province  or  territory  wherein  such  society 
has  subordinate  branches  and  all  business  transacted  at  such  meetings 
shall  be  as  valid  in  all  respects  as  if  such  meetings  were  held  in  this 
state.     But  its  principal  office  shall  be  located  in  this  state. 

Sec.  19.  No  personal  liability.  Officers  and  members  of  the  supremo, 
grand  or  any  subordinate  body  of  any  such  incorporated  society  shall 
not  be  individually  liable  for  the  payment  of  any  disability  or  death 
benefit  provided  for  in  the  laws  and  agreements  of  such  society,  but  the 
same  shall  be  payable  only  out  of  the  funds  of  such  society  and  in  the 
manner  provided  by  its  laws. 

Sec.  20.  Waiver  of  the  provisions  of  the  laws.  The  constitution  and 
laws  of  the  society  may  provide  that  no  subordinate  body,  nor  any  of 
its  subordinate  officers  or  members  shall  have  the  power  or  authority  1<» 
waive  any  of  the  provisions  of  laws  and  constitution  of  the  society,  and 
the  same  shall  be  binding  on  the  society  and  each  and  every  member 
thereof  and  on  all  beneficiaries  of  members. 

Sec.  21.  Benefits  not  attachabh.  No  money  or  other  benefit,  charity 
or  relief  or  aid  to  be  paid,  provided  or  rendered  by  any  such  society 
shall  be  liable  to  attachment,  garnishment  or  other  process,  or  be  seized, 
taken,  appropriated  or  applied  by  any  legal  or  equitable  process  or 
operation  of  law  to  pay  any  debt  or  liability  of  a  member  or  beneficiary. 
or  any  other  person  who  may  have  a  right  thereunder,  either  before  or 
after  payment. 

Sec.  22.  Constitution  and  laws;  amendment.  Every  society  trans- 
acting business  under  this  act  shall  file  with  the  insurance  commissioner 
a  duly  certified  copy  of  all  amendments  of  or  additions  to  its  constitu- 
tion and  laws  within  ninety  days  after  the  enactment  of  the  same. 
Printed  copies  of  the  constitution  and  laws  as  amended,  changed  or 
added  to,  certified  by  the  secretary  or  corresponding  officer  of  the 
society  shall  be  prima  facie  evidence  of  the  legal  adoption  thereof. 

Sec.  23.  Annual  reports.  Every  society  transacting  business  in  tli is 
state  shall  annually,  on  Or  before  the  first  day  of  March,  file  with  the 
insurance  commissioner  in  such  form  as  he  may  require,  a  statement 
under  oath  of  its  president  and  secretary  or  corresponding  officers,  of  its 
condition  and  standing  on  the  thirty-first  day  of  December  next  pre- 
ceding, and  of  its  transactions  for  the  year  ending  on  that  date  and  also 
shall  furnish  such  other  information  as  the  insurance  commissioner  may 
deem  necessary  to  a  proper  exhibit  of  its  business  and  plan  of  working, 
The  insurance  commissioner  may  at  other  times  require  any  further 
statement  he  may  deem  necessary  to  be  made  relating  to  such  society. 
In  addition  to  the  annual  report  herein  required,  each  society  shall 
annually  report  to  the  insurance  commissioner  a  valuation  of  its  certifi- 
cates in  force  on  December  31st,  last  preceding,  excluding  those  issued 
within  the  year  for  which  the  report  is  filed,  in  cases  where  the  contribu- 
tions for  the  first  year  in  whole  or  in  part  are  used  for  current  mortality 
and  expenses ;  provided,  the  first  report  of  valuation  shall  be  made  as  of 


FRATERNAL   BENEFIT    SOCIETIES.  139 

1  December  31st,  1912.  Such  report  of  valuation  shall  show,  as  contingent 
liabilities,  the  present  mid-year  value  of  the  promised  benefits  provided 
in  the  constitution  and  laws  of  such  society  under  certificates  then  sub- 
ject to  valuation ;  and,  as  contingent  assets,  the  present  mid-year  value 
of  the  future  net  contributions  provided  in  the  constitution  and  laws  as 
the  same  are  in  practice  actually  collected.  At  the  option  of  any  society, 
in  lieu  of  the  above,  the  valuation  may  show  the  net  value  of  the  certifi- 
cates subject  to  valuation  hereinbefore  provided  and  said  net  value, 
when  computed  in  case  of  monthly  contributions  may  be  the  mean  of  the 
terminal  values  for  the  end  of  the  preceding  and  of  the  current  insur- 
ance years.  Such  valuation  shall  be  certified  by  a  competent  account- 
ant or  actuary,  or  at  the  request  and  expense  of  the  society,  verified  by 
the  actuary  of  the  department  of  insurance  of  the  home  state  of  the 
society,  and  shall  be  filed  with  the  insurance  commissioner  within  ninety 
days  after  the  submission  of  the  last  preceding  annual  report.  The 
legal  minimum  standard  of  valuation  for  all  certificates,  except  for  dis- 
ability benefits,  shall  be  the  National  Fraternal  Congress  Table  of  Mor- 
tality as  adopted  by  the  National  Fraternal  Congress  August  23,  1899, 
or  at  the  option  of  the  society,  any  higher  table,  or,  at  its  option,  it  may 
use  a  table  based  upon  the  society's  own  experience  of  at  least  twenty 
years  and  covering  not  less  than  one  hundred  thousand  lives  with  in- 
terest assumption  not  more  than  four  per  centum  per  annum.  Each 
such  valuation  report  shall  set  forth  clearly  and  fully  the  mortality  and 
interest  basis  and  the  method  of  valuation.  Any  society  providing  for 
disability  benefits  shall  keep  the  net  contributions  for  such  benefits  in  a 
fund  separate  and  apart  from  all  other  benefit  and  expense  funds  and 
the  valuation  of  all  other  business  of  the  society;  provided,  that  where 
a  combined  contribution  table  is  used  by  a  society  for  both  death  and 
permanent  total  disability  benefits,  the  valuation  shall  be  according  to 
tables  of  reliable  experience  and  in  such  case  a  separation  of  the  funds 
shall  not  be  required.  The  valuation  herein  provided  for  shall  not  be 
considered  or  regarded  as  a  test  of  the  financial  solvency  of  the  society, 
but  each  society  shall  be  held  to  be  legally  solvent  so  long  as  the  funds 
in  its  possession  are  equal  to  or  in  excess  of  its  matured  liabilities. 
Beginning  with  the  year  1914  a  report  of  such  valuation  and  an  explana- 
tion of  the  facts  concerning  the  condition  of  the  society  thereby  dis- 
closed shall  be  printed  and  mailed  to  each  beneficiary  member  of  the 
society  not  later  than  June  1st  of  each  year,  or,  in  lieu  thereof,  such 
report  of  valuation  and  showing  of  the  society's  condition  as  thereby  dis- 
closed may  be  published  in  the  society's  official  paper  and  the  issue  con- 
taining  the  same  mailed  to  each  beneficiary  member  of  the  society.  The 
laws  of  such  society  shall  provide  that  if  the  stated  periodical  contribu- 
tions of  the  members  are  insufficient  to  pay  all  matured  death  and  dis- 
ability claims  in  full  and  to  provide  for  the  creation  and  maintenance 
of  the  funds  required  by  its  laws  additional,  increased  or  extra  rates  of 
contribution  shall  be  collected  from  the  members  to  meet  such  defi- 
ciency ;  and  such  laws  may  provide  that,  upon  the  written  application  or 
consent  of  the  member,  his  certificate  may  be  charged  with  its  propor- 
tion of  any  deficiency  disclosed  by  valuation,  with  interest  not  exceeding- 
five  per  cent  inn  per  annum. 

Sbcj.  23a.     Provisions  to  insure  future  security.     If  the  valuation  of 
the  certificates,  as  hereinbefore  provided,  on  December  31st,  1917,  shall 


140  INSURANCE   LAWS   OP   CALIFORNIA 

show  that  the  present  value  of  future  net  contributions,  together  with 
the  admitted  assets,  is  less  than  ninety  per  centum  of  the  present  value 
of  the  promised  benefits  and  accrued  liabilities,  such  society  shall  be 
required  thereafter  to  reduce  such  deficiency  not  less  than  five  per 
centum  of  the  total  deficiency  on  said  December  31st,  1917,  at  each  suc- 
ceeding triennial  valuation.  If  at  any  succeeding  triennial  valuation 
such  society  does  not  show  such  percentage  of  improvement,  the  insur- 
ance commissioner  shall  direct  that  it  thereafter  comply  with  the  require- 
ments herein  specified.  If  the  next  succeeding  triennial  valuation  after 
the  receipt  of  such  notice  shall  show  that  the  society  has  not  made  the 
percentage  of  improvement  required  herein,  the  insurance  commis- 
sioner may,  in  the  absence  of  good  cause  shown  for  such  failure,  insti- 
tute proceedings  for  the  dissolution  of  such  society,  in  accordance  with 
the  provisions  of  section  24  of  this  act,  or,  in  the  case  of  a  foreign 
society,  he  may  cancel  its  certificate  of  authority  to  transact  business  in 
this  state.  Any  such  society,  shown  by  any  triennial  valuation,  subse- 
quent to  December  31,  1917,  not  to  have  made  the  improvements  herein 
required  shall,  within  one  year  thereafter,  complete  such  deficient  im- 
provements, or  thereafter,  as  to  all  new  members  admitted,  be  subject,  so 
far  as  stated  rates  of  contribution  are  concerned,  to  the  provisions  of  sec- 
tion 12  of  this  act.  applicable  in  the  organization  of  new  societies;  pro- 
vided, that  the  contributions  and  funds  of  such  new  members  shall  be 
kept  separate  and  apart  from  the  other  funds  of  the  society  until  the 
required  improvement  shall  be  shown  by  valuation.  If  such  required 
improvement  is  not  shown  by  the  succeeding  triennial  valuation,  then 
the  said  new  members  may  be  placed  in  a  separate  class  and  their  certifi- 
cates valued  as  an  independent  society  in  respect  of  contributions  and 
funds. 

Sec.  24.  Examination  of  domestic  societies.  The  insurance  com- 
missioner, or  any  person  he  may  appoint  shall  have  the  power  of  visita- 
tion and  examination  into  the  affairs  of  any  domestic  society.  He  may 
employ  assistants  for  the  purpose  of  such  examination,  and  he,  or  any 
person  he  may  appoint,  shall  have  free  access  to  all  the  books,  papers 
and  documents  that  relate  to  the  business  of  the  society  and  may  sum- 
mon and  qualify  as  witness  under  oath  and  examine  its  officers,  agents 
and  employees  or  other  persons  in  relation  to  the  affairs,  transactions 
and  conditions  of  the  society.  The  expense  of  such  examination  shall 
be  paid  by  the  society  examined,  upon  statement  furnished  by  the 
insurance  commissioner,  and  the  examination  shall  be  made  at  least  once 
in  three  years.  Whenever  after  examination  the  insurance  commissioner 
is  satisfied  that  any  domestic  society  has  failed  to  comply  with  any  pro- 
visions of  this  act,  or  is  exceeding  its  powers,  or  is  not  carrying  out  its 
contracts  in  good  faith,  or  is  transacting  business  fraudulently  or  when- 
ever any  domestic  society,  after  the  existence  of  one  year  or  more,  shall 
have  a  membership  of  less  than  four  hundred  (or  shall  determine  to 
discontinue  business),  the  insurance  commissioner  may  present  the  facts 
relating  thereto  to  the  attorney  general,  who  shall,  if  he  deem  the  cir- 
cumstances warrant,  commence  an  action  in  quo  warranto  in  a  court  of 
competent  jurisdiction,  and  such  court  shall  thereupon  notify  the  officers 
of  such  society  of  a  hearing,  and  it  shall  then  appear  that  such  society 
should  be  closed,  said  society  shall  be  enjoined  from  carrying  on  any 
further  business  and  some  person  shall  be  appointed  receiver  of  such 


FRATERNAL   BENEFIT   SOCIETIES.  141 

society,  and  shall  proceed  at  once  to  take  possession  of  the  books,  papers, 
moneys  and  other  assets  of  the  society  and  shall  forthwith,  under  the 
direction  of  the  court,  proceed  to  close  the  affairs  of  the  society  and  to 
distribute  its  funds  to  those  entitled  thereto.  No  such  proceedings  shall 
be  commenced  by  the  attorney  general  against  any  such  society  until 
after  notice  has  been  duly  served  on  the  chief  executive  officers  of  the 
society  and  a  reasonable  opportunity  given  to  it,  on  a  date  to  be  named 
in  said  notice,  to  show  cause  why  such  proceedings  should  not  be 
commenced. 

Sec.  25.  Application  for  receiver,  etc.  No  application  for  injunc- 
tion against  or  proceedings  for  the  dissolution  of  or  the  appointment  of 
a  receiver  for  any  such  domestic  society  or  branch  thereof  shall  be 
entertained  by  any  court  in  this  state  unless  the  same  is  made  by  the 
attorney  general. 

Sec.  26.  Examination  of  foreign  societies.  The  insurance  commis- 
sioner or  any  person  whom  he  may  appoint",  may  examine  any  foreign 
society  transacting  or  applying  for  admission  to  transact  business  in  this 
state.  The  said  insurance  commissioner  may  employ  assistants,  and  he, 
or  any  person  he  may  appoint,  shall  have  free  access  to  all  the  books, 
papers  and  documents  that  relate  to  the  business  of  the  society,  and  may 
summon  and  qualify  as  witness  under  oath  and  examine  its  officers, 
agents  and  employees  and  other  persons  in  relation  to  the  affairs,  trans- 
actions and  condition  of  the  society.  He  may,  in  his  discretion,  accept 
in  lieu  of  such  examination  the  examination  of  the  insurance  depart- 
ment of  the  state,  territory,  district,  province  or  country  where  such 
society  is  organized.  The  actual  expenses  of  examiners  making  any 
such  examination  shall  be  paid  by  the  society  upon  statement  furnished 
by  the  insurance  commissioner.  If  any  such  society  or  its  officers  refuse 
to  submit  to  such  examination  or  to  comply  with  the  provisions  of  the 
section  relative  thereto,  the  authority  of  such  society  to  write  new  busi- 
ness in  this  state  shall  be  suspended  or  license  refused  until  satisfactory 
evidence  is  furnished  the  insurance  commissioner  relating  to  the  con- 
dition and  affairs  of  the  society,  and  during  such  suspension  the  society 
shall  not  write  new  business  in  this  state. 

Sec.  27.  No  adverse  publication.  Pending,  during  or  after  an  exam- 
i nation  or  investigation  of  any  such  society,  either  domestic  or  foreign, 
the  insurance  commissioner  shall  make  public  no  financial  statement, 
report  or  finding,  nor  shall  he  permit  to  become  public  any  financial 
statement,  report  or  finding  affecting  the  status,  standing  or  rights  of 
any  such  society,  until  a  copy  thereof  shall  have  been  served  upon  such 
society,  at  its  home  office,  nor  until  such  society  shall  have  been  afforded 
a  reasonable  opportunity  to  answer  any  such  financial  statement,  report 
or  finding  and  to  make  such  showing  in  connection  therewith  as  it  may 
desire. 

Sec.  28.  Revocation  of  license.  When  the  insurance  commissioner 
on  investigation  is  satisfied  that  any  foreign  society  transacting  business 
under  this  act  has  exceeded  its  powers,  or  has  failed  to  comply  with  any 
provisions  of  this  act,  or  is  conducting  business  fraudulently,  or  is  not 
carrying  out  its  contracts  in  good  faith  he  shall  notify  the  society  of  his 
findings,  and  state  in  writing  the  grounds  of  his  dissatisfaction,  and 
after  reasonable  notice  require  said  society,  on  a  date  named,  to  show 


142  INSURANCE   LAWS   OP   CALIFORNIA. 

cause  why  its  license  should  not  be  revoked.  If  on  the  date  named  in 
said  notice  such  objections  have  not  been  removed  to  the  satisfaction  of 
the  said  insurance  commissioner,  or  the  society  does  "not  present  good 
and  sufficient  reasons  why  its  authority  to  transact  business  in  this 
state  should  not  at  that  time  be  revoked,  he  may  revoke  the  authority  of 
the  society  to  continue  business  in  this  state.  All  decisions  and  findings 
of  the  insurance  commissioner  made  under  the  provisions  of  this  section 
may  be  reviewed  by  proper  proceedings  in  any  court  of  competent  juris- 
diction, as  provided  in  section  16  of  this  act. 

Sec.  29.  Exemption  of  certain  societies.  Nothing  contained  in  this 
act  shall  be  contrued  to  affect  or  apply  to  grand  or  subordinate  lodges 
of  Masons,  Odd  Fellows  or  Knights  of  Pythias  (exclusive  of  the  insur- 
ance department  of  the  supreme  lodge  Knights  of  Pythias),  and  the 
Junior  Order  of  United  American  Mechanics  (exclusive  of  the  bene- 
ficiary degree  or  insurance  branch  of  the  national  council  Junior  Order 
United  American  Mechanics)  or  societies  which  limit  their  membership 
to  any  one  hazardous  occupation,  nor  to  similar  societies  which  do  not 
issue  insurance  certificates,  nor  to  an  association  of  local  lodges  of  a 
society  now  doing  business  in  this  state  which  provides  death  benefits 
not  exceeding  three  hundred  dollars  to  any  one  person,  or  disability 
benefits  not  exceeding  three  hundred  dollars  in  an}'  one  year  to  any  one 
person,  or  both,  nor  to  any  contracts  of  reinsurance  business  oh  such 
plan  in  this  state,  nor  to  domestic  societies  which  limit  their  membership 
to  the  employees  of  a  particular  city  or  town,  designated  firm,  business 
house  or  corporation,  nor  to  domestic  lodges,  orders  or  associations  of  a 
purely  religious,  charitable  and  benevolent  description,  which  do  not 
provide  for  a  death  benefit  of  more  than  one  hundred  dollars,  or  for 
disability  benefits  of  more  than  one  hundred  and  fifty  dollars  to  any  one 
person  in  any  one  year ;  provided,  always,  that  any  such  domestic  order 
or  society  which  has  more  than  five  hundred  members,  and  provides  for 
death  or  disability  benefits,  and  any  such  domestic  lodge,  order  or  society 
which  issues  to  any  person  a  certificate  providing  for  the  payment  of 
benefits,  shall  not  be  exempt  by  the  provisions  of  this  section,  but  shall 
comply  with  all  the  requirements  of  this  act.  The  insurance  commis- 
sioner may  require  from  any  society  such  information  as  will  enable  him 
to  determine  whether  such  society  is  exempt  from  the  provisions  of  this 
act.  No  society,  which  is  exempt  by  the  provisions  of  this  section  from 
the  requirement  of  this  act  shall  give  or  allow  or  promise  to  give  or 
allow,  to  any  person  any  compensation  for  procuring  new  members. 
Any  fraternal  benefit  society,  heretofore  organized  and  incorporated 
and  operating  within  the  definition  set  forth  in  sections  1,  2  and  3,  of 
this  act,  providing  for  benefits  in  case  of  death  or  disability  resulting 
solely  from  accidents,  but  which  does  not  obligate  itself  to  pay  death  or 
sick  benefits,  may  be  licensed  under  the  provisions  of  this  act,  and  shall 
have  all  the  privileges  and  shall  be  subject  to  all  the  provisions  and 
regulations  of  this  act,  except  that  the  provisions  of  this  act  requiring 
medical  examinations,  valuations  of  benefit  certificates,  and  that  the  cer- 
tificate shall  specify  the  amount  of  benefits,  shall  not  apply  to  such 
society. 

Sec.  30.  Taxation.  Every  fraternal  benefit  society  organized  or 
licensed  under  this  act  is  hereby  declared  to  be  a  charitable  and  benevo- 
lent institution,  and  all  of  its  funds  shall  be  exempt  from  all  and  every 


CONTRACTS   FOR   EXCHANGE   OP  INDEMNITY.  143 

state,  county,  district,  municipal  and  school  tax,  other  than  taxes  on  real 
estate  and  office  equipment. 

Sec.  31.  Penalties.  Any  person,  officer,  member  or  examining  phy- 
sician of  any  society  authorized  to  do  business  under  this  act  who  shall 
knowingly  or  wilfully  make  any  false  or  fraudulent  statement  or  repre- 
sentation in  or  with  reference  to  any  application  for  membership,  or  for 
the  purpose  of  obtaining  money  from  or  benefit  in  any  society  trans- 
acting business  under  this  act,  shall  be  guilty  of  a  misdemeanor,  and 
upon  conviction  thereof  shall  be  punished  by  a  fine  of  not  less  than  one 
hundred  dollars  nor  more  than  five  hundred  dollars,  or  imprisonment  in 
the  county  jail  for  not  less  than  thirty  days  nor  more  than  one  year,  or 
both,  in  the  discretion  of  the  court;  and  any  person  who  shall  wilfully 
make  a  false  statement  of  any  material  fact  or  thing  in  a  sworn  state- 
ment as  to  the  death  or  disability  of  a  certificate  holder  in  any  such 
society  for  the  purpose  of  procuring  payment  of  a  benefit  named  in  the 
certificate  of  such  holder,  and  any  person  who  shall  wilfully  make  any 
false  statement  in  any  verified  report  or  declaration  under  oath  required 
or  authorized  by  this  act,  shall  be  guilty  of  perjury,  and  shall  be  pro- 
ceeded against  and  punished  as  provided  by  the  statutes  of  this  state  in 
relation  to  the  crime  of  perjury.  Any  person  who  shall  solicit  member- 
ship for,  or  in  any  manner  assist  in  procuring  membership  in  any  fra- 
ternal benefit  society  not  licensed  to  do  business  in  this  state,  or  who 
shall  solicit  membership  for,  or  in  any  manner  assist  in  procuring  mem- 
bership in  any  such  society  not  authorized  as  herein  provided,  to  do 
business  as  herein  defined  in  this  state  shall  be  guilty  of  a  misdemeanor 
and  upon  conviction  thereof  shall  be  punished  by  a  fine  of  not  less  than 
fifty  nor  more  than  two  hundred  dollars.  Any  society,  or  any  officer, 
agent  or  employee  thereof  neglecting  or  refusing  to  comply  with,  or 
violating  any  of  the  provisions  of  this  act,  the  penalty  for  which  neglect, 
refusal  or  violation  is  not  specified  in  this  section,  shall  be  fined  not 
exceeding  two  hundred  dollars  upon  conviction  thereof. 

Sec.  32.  All  acts  and  parts  of  acts  inconsistent  with  this  act  are 
hereby  repealed. 


An  act  defining  certain  classes  of  contracts  for  the  exchange  of  indemnity, 
prescribing  regulations  therefor  and  fixing  a  license  fee. 

[Approved  Dec.  24,  1911;  Extra  Session  Stats.  1911,  p.  111.] 
The  people  of  the  State  of  California  do  enact  as  follows: 

Section  1.  Individuals,  partnerships  or  corporations  may  exchange 
reciprocal  or  interinsurance  contracts  providing  indemnity  among  each 
other  from  loss  or  from  other  damages  in  accordance  with  the  following 
provisions  of  this  act ;  provided,  that  no  individual,  partnership  or  cor- 
poration thus  exchanging  indemnity  shall  assume  on  any  single  risk  an 
amount  greater  than  ten  per  cent  of  the  net  financial  rating  of  such 
individual,  partnership  or  corporation ;  such  financial  rating  to  be  shown 
by  the  reports  of  a  commercial  agency  having  at  least  one  hundred  thou- 
sand members. 

Sec.  2.  Such  individuals,  partnerships  or  corporations  so  contract- 
ing among  themselves  shall  have  the  power  to  appoint  an  attorney,  agent 
or  other  representative  and  shall,  through  their  attorney,  agent  or  other 


144  INSURANCE   LAWS  OP   CALIFORNIA. 

representative,  file  with  the  insurance  commissioner  of  this  state  a  cer- 
tificate in  writing,  verified  by  the  oath  of  said  attorney,  agent  or  other 
representative,  setting  forth : 

(a)  The  name  or  title  by  which  said  individuals,  partnerships  or  cor- 
porations intending  to  make  such  contracts  shall  be  known.  The  insur- 
ance commissioner  may  reject  any  name  or  title  so  submitted  when  the 
same  is  an  interference  with  or  too  similar  to  one  already  appropriated 
or  likely  to  mislead  the  public  in  any  respect  and,  in  such  case,  a  name 
not  liable  to  such  objection  must  be  chosen. 

(6)  A  verified  copy  of  the  form  of  policy,  contract  or  agreement 
under  or  by  which  such  indemnity  is  to  be  exchanged. 

(c)  A  verified  copy  of  the  form  of  power  of  attorney  or  other  au- 
thority of  any  said  attorney,  agent  or  other  representative  setting  forth 
the  character  of  such  representation  and  the  authority  of  such  repre- 
sentative. 

(d)  The  location  of  the  office  or  offices  through  which  said  policies, 
contracts  or  agreements  are  to  be  issued. 

(e)  Such  attorney  in  fact  shall  also  file  a  stipulation  or  agreement  in 
writing  that  any  notice,  provided  by  law  or  by  any  insurance  policy, 
proof  of  loss,  summons  or  other  process  may  be  served  upon  the  attorney 
in  fact  or  upon  the  insurance  commissioner  of  the  State  of  California, 
in  all  actions  or  in  other  legal  proceedings  against  such  individuals, 
partnerships  or  corporations  thus  exchanging  indemnity  under  the  pro- 
visions of  section  1  of  this  act.  All  notices,  proofs  of  loss,  summons 
or  other  legal  process  so  served  shall  give  jurisdiction  over  the  persons 
of  such  individuals,  partnerships  or  corporations  thus  exchanging  in- 
demnity. Whenever  such  service  of  notice,  proofs  of  loss,  summons  or 
other  process  shall  be  made  upon  the  insurance  commissioner,  he  must 
within  ten  days  thereafter,  transmit  by  mail,  postage  paid,  a  copy  of 
such  notice,  proof  of  loss,  or  summons  or  other  process  to  the  attorney 
in  fact  so  appointed  by  such  individuals,  partnerships  or  corporations  so 
contracting  among  themselves  and  shall  be  addressed  to  such  attorney  in 
fact  at  the  home  or  principal  office  through  which  such  policies  are  to 
be  issued.  The  sending  of  such  copy  by  the  insurance  commissioner 
shall  be  a  necessary  part  of  the  service  of  the  notice,  proof  of  loss,  sum- 
mons or  other  process.  When  any  notice,  summons  or  other  legal  process 
is  served  upon  the  insurance  commissioner  pursuant  to  the  provisions  of 
this  section,  the  service  as  to  such  individuals,  partnerships,  or  corpora- 
tions thus  exchanging  indemnity  shall  be  deemed  complete  at  the  end  of 
sixty  days  after  the  date  of  the  mailing  of  such  copy  of  such  notice, 
proof  of  loss,  summons  or  other  legal  process  to  the  attorney  in  fact  as 
herein  provided  for. 

(/)  The  attorney,  agent  or  other  representative  shall,  whenever  and 
as  often  as  the  same  shall  be  requested,  file  with  the  insurance  commis- 
sioner a  statement  verified  by  his  oath  to  the  effect  that  he  has  examined 
the  commercial  rating  of  the  individuals,  partnerships  or  corporations, 
composing  the  subscribers  in  such  reciprocal  or  interinsurance  exchange 
as  shown  by  a  commercial  agency  having  at  least  one  hundred  thou- 
sand subscribers  and  that,  from  such  examination,  it  appears  that  no 
subscriber  of  such  exchange  has  assumed  on  any  single  risk  an  amount 
of  liability  greater  than  ten  per  cent  of  the  net  financial  rating  of  such 
subscriber  when  such  risk  was  assumed. 


CONTRACTS    FOR   EXCHANGE   OP   INDEMNITY.  145 

(g)  There  shall  also  be  filed  with  the  insurance  commissioner  by  any 
said  attorney,  agent  or  other  representative,  a  written  stipulation  to  the 
effect  that  all  insurance  written  by  him  upon  property  situated  within 
this  state  shall  be  deemed  to  be  business  done  in  this  state  and  within 
the  terms  and  subject  as  to  taxation  to  the  provisions  of  section  14  of 
article  13  of  the  constitution  of  this  state. 

Sec.  3.  The  agent,  attorney  or  other  representative  by  or  through 
whom  are  issued  or  negotiated  any  policies  of  or  contracts  or  agreements 
for  any  insurance  or  indemnity  of  the  character  referred  to  in  section 
one  of  this  act  shall  procure  from  the  insurance  commissioner  a  certifi- 
cate of  authority  stating  that  all  the  requirements  of  this  act  have  been 
complied  with  and  upon  such  compliance  and  the  payment  of  a  fee  of 
fifty  dollars  the  insurance  commissioner  shall  issue  such  certificate. 
Such  certificate  must  be  renewed  annually,  for  which  a  fee  of  ten  dollars 
shall  be  paid.  Any  such  certificate  so  issued  as  above  may  be  revoked  or 
suspended  by  the  insurance  commissioner  if  any  of  such  individuals, 
partnerships  or  corporations  exchanging  indemnity  under  the  provisions 
of  this  act  fail  to  comply  with  any  or  all  of  the  requirements  of  this  act. 

Sec.  4.  The  attorney  in  fact  of  such  individuals,  partnerships  or 
corporations  composing  such  reciprocal  or  interinsurance  exchange  shall 
file  with  the  insurance  commissioner  of  this  state,  on  or  before  the  first 
of  March  of  each  year,  upon  forms  to  be  prepared  by  the  insurance  com- 
missioner, a  statement  which  must  exhibit  the  condition  and  affairs  of 
such  exchange  on  the  31st  day  of  December  then  next  preceding. 

Sec.  5.  The  insurance  commissioner,  whenever  he  deems  necessary, 
must  make  an  examination  of  the  condition  and  affairs  relating  to  the 
exchange  of  indemnity  of  such  individuals,  partnerships  or  corporations 
composing  such  reciprocal  or  interinsurance  exchange  and  must  make 
such  an  examination  before  issuing  its  original  certificate  of  authority 
to  do  business  in  this  state ;  or  where  the  home  office  of  the  interinsur- 
ance or  reciprocal  exchange  is  located  outside  of  the  State  of  California, 
and  when  such  interinsurance  or  reciprocal  exchange  is  licensed  by  the 
insurance  commissioner  or  department  of  the  state  where  such  home 
office  is  located,  the  insurance  commissioner  shall  accept  as  satisfactory 
a  certificate  of  compliance  issued  by  the  insurance  commissioner  or 
department  of  the  state  where  said  home  office  is  located.  Such  exam- 
ination shall  verify  the  certificate  and  statement  filed  by  the  attorney  in 
fact.  Such  exchange  must  open  its  books  and  papers  for  the  inspection 
of  the  insurance  commissioner  and  shall  otherwise  facilitate  such  exam- 
ination and  the  commissioner  may  administer  oaths  and  examine  under 
oath  any  person  relative  to  the  contracts  of  such  exchange,  and  if  he 
finds  the  books  to  have  been  carelessly  or  improperly  kept  or  posted  he 
must  employ  sworn  experts  to  rewrite,  post  and  balance  the  same  at  the 
expense  of  such  individuals,  partnerships  or  corporations  composing 
such  reciprocal  or  interinsurance  exchange.  Such  examination  must  be 
conducted  in  the  county  where  such  individuals,  partnerships  or  corpo- 
rations composing  such  reciprocal  or  interinsurance  exchange  has  its 
principal  office  and  must  be  private.  Whenever  the  commissioner  shall 
make  such  examination  as  aforesaid  the  same  must  be  at  the  expense  of 
the  individuals,  partnerships  and  corporations  composing  such  recip- 
rocal or  interinsurance  exchange;  such  expense  to  be  paid  in  advance, 
and  in  the  event  of  refusal  to  pay  such  expenses  the  insurance  commis- 

10— IL 


146  INSURANCE   LAWS   OF    CALIFORNIA. 

sioner  may  refuse  to  issue  any  such  certificate  of  authority  and  must 
revoke  any  existing  certificate  of  authority  authorizing  such  individuals, 
partnerships  and  corporations  composing  such  reciprocal  or  interinsur- 
ance  exchange  to  execute  such  contracts  of  indemnity. 

Sec.  6.  Unincorporated  interindemnity  companies  who  do  not  issue 
policies  of  insurance,  who  do  not  charge  expenses  of  management  except 
in  liquidation  of  losses,  nor  accept  premiums  from  its  members  shall  be 
exempt  from  the  the  provisions  of  this  act. 

Sec.  7.  All  policies  and  insurance  contracts  or  contracts  of  indem- 
nity upon  a  risk  or  risks  situated  in  the  State  of  California,  held  by  an 
individual,  partnership  or  corporations  as  a  subscriber  of  any  reciprocal 
or  interinsurance  exchange  which  exchange  is  not  authorized  to  do  busi- 
ness in  the  State  of  California  shall  be  null  and  void ;  provided,  that  any 
insurance  agreement  or  agreement  for  indemnity  on  goods  in  transit  or 
the  property  of  common  carriers  used  by  such  common  carriers  in  the 
transaction  of  their  business  as  such  carriers  shall  be  deemed  not  ren- 
dered void. 

Sec.  8.  For  the  purpose  of  taxation  under  the  provisions  of  sec- 
tion 14  of  article  13  of  the  constitution  of  the  State  of  California  all  con- 
tracts of  indemnity  upon  risks  located  in  this  state  between  individuals, 
partnerships  and  corporations  under  the  provisions  of  this  act  shall  be 
deemed  to  be  contracts  of  insurance  upon  business  done  in  this  state 
under  and  subject  to  the  provisions  of  such  section  14  article  13  of  the 
constitution  of  the  State  of  California. 

Sec.  9.  Individuals,  partnerships  and  corporations  exchanging  re- 
ciprocal or  interinsurance  contracts  providing  indemnity  among  each 
other  shall  be  exempt  from  the  provisions  of  other  insurance  laws  of 
this  state. 

Sec.  10.     This  act  shall  take  effect  July  1,  1911. 


An  act  to  establish  a  standard  form  of  fire  insurance  policy  and  to  prevent 
variations  therefrom,  excepting  under  certain  stated  conditions  and  restric- 
tions. 

[Approved  March  18,  1909;  Stats.  1909,  p.  404.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Section  1.     The  following  is  adopted  as  a  standard  form  of  fire  in- 
surance policy  for  the  State  of  California : 

CALIFORNIA  STANDARD  FORM  FIRE  INSURANCE  POLICY. 

No Amount  $ 

Rate 

No  other  insurance  permitted 
except  by  agreement  endorsed  hereon  or  added  hereto. 
(Here  insert  name  of  company,  and  place  of  its  main  office  in  Cali- 
fornia, and  name  of  state  or  country  under  which  incorporated  or 
organized. ) 

IN   CONSIDERATION  of  the  stipulations  herein  named  and  of 

dollars  premium  does  insure for  the  term  of from 

the day  of ,  19 ,  at  noon,  to  the  day  of ,  19 , 


STANDARD   FORM    OF   FIRE   INSURANCE   POLICY.  147 

at  noon  against  all  loss  or  damage  by  fire,  except  as  hereinafter  pro- 
vided. 

To  an  amount  not  exceeding dollars  to  the  following  described 

property  while  located  and  contained  as  described  herein,  and  not  else- 
where, to  wit : 


The  company  will  not  be  liable  beyond  the  actual  cash  value  of  the 
interest  of  the  insured  in  the  property  at  the  time  of  loss  or  damage  nor 
exceeding  what  it  would  then  cost  the  insured  to  repair  or  replace  the 
same  with  material  of  like  kind  and  quality;  said  cash  value  to  be  esti- 
mated without  allowance  for  any  increased  cost  of  repair  or  reconstruc- 
tion by  reason  of  any  ordinance  or  law  regulating  repair  or  construction 
of  buildings,  and  without  compensation  for  loss  resulting  from  interrup- 
tion of  business  or  manufacture. 

This  policy  is  made  and  accepted  subject  to  the  foregoing  stipulations 
and  conditions  and  those  hereinafter  stated,  which  are  hereby  specially 
referred  to,  and  made  part  of  this  policy,  together  with  such  other  pro- 
visions, agreements  or  conditions  as  may  be  endorsed  hereon  or  added 
hereto,  and  no  officer,  agent,  or  other  representative  of  this  company 
shall  have  power  to  waive  any  provision  or  condition  of  this  policy 
except  by  writing  endorsed  hereon  or  added  hereto,  and  no  person, 
unless  duly  authorized  in  writing,  shall  be  deemed  the  agent  of  this 
company. 

This  policy  shall  not  be  valid  until  countersigned  by  the  duly  author- 
ized agent  of  the  company,  at 

In  witness  whereof,  this  company  has  executed  and  attested  these 
presents  (here  insert  name  of  company) 

by : 

Countersigned  at ,  this day  of ,  19 

,  Agent. 

STIPULATIONS   AND    CONDITIONS    SPECIALLY   REFERRED   TO. 

Property  not  covered,  (a)  This  company  shall  not  be  liable  for  loss 
to  accounts,  bills,  currency,  evidences  of  debt  or  ownership  or  other 
documents,  money,  notes  or  securities ;  nor  ( b )  unless  liability  is  specif- 
ically assumed  hereon,  for  loss  to  bullion,  casts,  curiosities,  drawings, 
dies,  jewels,  manuscripts,  medals,  models,  patterns,  pictures,  scientific 
apparatus,  business  or  store  or  office  furniture  or  fixtures,  sculptures, 
frescoes,  decorations,  or  property  held  on  storage  or  for  repair. 

Hazards  not  covered.  This  company  will  not  be  liable  for  loss  by 
(a)  theft;  or  (6)  by  neglect  of  the  insured  to  use  all  reasonable  means 
to  save  and  preserve  the  property  at  and  after  a  fire,  or  when  the  prop- 
erty is  endangered  by  fire;  or  (c)  (unless  fire  ensues,  and  in  that  event 
for  the  damage  by  fire  only)  by  explosion  of  any  kind  or  lightning;  or 
{d)  by  invasion,  insurrection,  riot,  civil  war,  or  commotion,  or  (except 
as  hereinafter  provided)  by  military  or  usurped  power,  or  order  of 
any  civil  authority,  but  the  company  will  be  liable  (unless  otherwise 
provided  by  endorsement  hereon  or  added  hereto)  if  the  property  is  lost 
or  damaged,  by  fire  or  otherwise,  by  civil  authority   or  military  or 


148  INSURANCE   LAWS   OF   CALIFORNIA. 

usurped  power  exercised  to  prevent  the  spread  of  fire  not  originating 
from  a  cause  excepted  hereunder  and  which  fire  otherwise  probably 
would  have  caused  the  loss  of  or  damage  to  the  insured  property. 

Matters  avoiding  policy.  This  entire  policy  shall  be  void,  (a)  if  the 
insured  has  concealed  or  misrepresented  any  material  fact  or  circum- 
stances concerning  this  insurance  or  the  subject  thereof;  or,  (b)  in  case 
of  any  fraud  or  false  swearing  by  the  insured  touching  any  matter 
relating  to  this  insurance  or  the  subject  thereof,  whether  before  or  after 
a  loss. 

Unless  otherwise  provided  by  agreement  endorsed  hereon  or  added 
hereto,  this  entire  policy  shall  be  void,  (a)  if  the  insured  now  has  or 
shall  procure  any  other  insurance,  whether  valid  or  not,  on  property 
covered  in  whole  or  in  part  by  this  policy,  or  (/;)  if  the  interest  of  the 
insured  be  other  than  unconditional  and  sole  ownership,  or  (c)  if  the 
subject  of  insurance  be  a  building  on  ground  not  owned  by  the  insured 
in  fee  simple,  or  (d)  if  with  the  knowledge  of  the  insured  foreclosure 
proceedings  be  commenced  or  notice  given  of  sale  of  any  property  cov- 
ered by  this  policy  by  virtue  of  any  mortgage  or  trust  deed,  or  (e)  if 
this  policy  be  assigned  before  a  loss. 

Matters  suspending  insurance.  Unless  otherwise  provided  by  agree- 
ment endorsed  hereon  or  added  hereto  this  company  shall  not  be  liable 
for  loss  or  damage  occurring  (a)  while  the  hazard  be  materially  in- 
creased by  any  means  within  the  control  of  the  insured;  or  (b)  if  the 
subject  of  insurance  be  a  manufacturing  establishment,  while  it  is  oper- 
ated in  whole  or  in  part  at  night  later  than  ten  o'clock  or  while  it  ceases 
to  be  operated  beyond  the  period  of  ten  consecutive  days;  or  (c)  while 
mechanics  or  artisans  are  employed  in  building  or  altering  or  repairing 
the  described  premises  for  more  than  fifteen  days  at  any  one  time;  or 
(d)  while  illuminating  gas  or  vapor  be  generated  in  the  described  build- 
ing (or  adjacent  thereto)  for  use  therein-  or  (e)  while  there  be  kept, 
used  or  allowed  on  the  described  premises  (any  usage  or  custom  of  trade 
or  manufacture  to  the  contrary  notwithstanding)  calcium  carbide,  phos- 
phorus, dynamite,  nitroglycerine,  fireworks  or  other  explosives;  or 
exceeding  one  quart  each  of  benzine,  gasoline,  naphtha  or  ether ;  or  more 
than  twenty-five  pounds  of  gunpowder;  or  (/*)  while  a  building  herein 
described  whether  intended  for  occupation  by  owner  or  tenant  is  vacant 
or  unoccupied  beyond  the  period  of  ten  (10)  consecutive  days ;  (g)  while 
the  interest  in,  title  to  or  possession  of  the  subject  of  insurance  is 
changed  excepting:  (1)  by  the  death  of  the  insured;  (2)  a  change  of 
occupancy  of  building  without  material  increase  of  hazard;  and  (3) 
transfer  by  one  or  more  several  copartners  or  co-owners  to  the  others. 

Such  suspension  shall  not  extend  the  term  of  this  policy  nor  create 
any  right  for  refund  of  the  whole  or  any  portion  of  premium,  nor  affect 
the  respective  rights  of  cancellation. 

Chattel  mortgage.  Unless  otherwise  provided  by  agreement  in  writ- 
ing endorsed  hereon  or  added  hereto  this  company  shall  not  be  liable  for 
loss  or  damage  to  any  property  insured  hereunder  while  encumbered  by 
a  chattel  mortgage,  but  the  liability  of  the  company  upon  other  property 
hereby  insured  shall  not  be  affected  by  such  chattel  mortgage. 

Fallen  building  clause.  Unless  otherwise  provided  by  agreement 
endorsed  hereon  or  added  hereto,  if  a  building  or  any  material  part 
thereof  fall,  except  as  the  result  of  fire,  all  insurance  by  this  policy  on 
such  building  or  its  contents  shall  immediately  cease. 


STANDARD   FORM   OP   FIRE   INSURANCE   POLICY.  149 

Removal  when  endangered  by  fire.  Should  any  of  said  property  be 
necessarily  removed  because  of  danger  from  fire,  and  there  is  no  other 
insurance  thereon,  that  part  of  this  policy  in  excess  of  the  value  of  the 
insured  property  remaining  in  the  original  location,  or,  if  there  is  other 
insurance  thereon,  that  part  of  this  policy  in  excess  of  its  proportion  of 
the  value  of  the  insured  property  remaining  in  the  original  location, 
shall,  for  the  ensuing  five  days  only,  cover  said  removed  property  in  its 
new  location  or  locations. 

Cancellation.  This  policy  shall  be  canceled  at  any  time  at  the  request 
of  the  insured,  in  which  case  the  company  shall,  upon  surrender  of  this 
policy,  refund  the  excess  of  paid  premium  above  the  customary  short 
rates  for  the  expired  time.  This  policy  may  be  canceled  at  any  time, 
without  tender  of  unearned  portion  of  premium,  by  the  company  by 
giving  five  (5)  days'  written  notice  of  cancellation  to  the  insured  and  to 
any  mortgagee  or  other  party  to  whom,  with  the  written  consent  of  the 
company,  this  policy  is  made  payable,  in  which  case  the  company  shall, 
upon  surrender  of  the  policy  or  relinquishment  of  liability  thereunder, 
refund  the  excess  of  paid  premium  above  the  pro  rata  premium  for  the 
expired  time. 

Duty  of  insured  in  case  of  loss.  When  a  loss  occurs  the  insured  must 
give  to  this  company  written  notice  thereof  without  unnecessary  delay ; 
and  shall  protect  the  property  from  further  damage;  forthwith  separate 
the  damaged  and  undamaged  personal  property  and  put  it  in  the  best 
possible  order;  and  without  unnecessary  delay  make  a  complete  inven- 
tory stating  as  far  as  possible  the  quantity  and  cost  of  each  article,  and 
the  amount  claimed  thereon. 

Within  sixty  days  after  the  commencement  of  the  fire  the  insured 
skill  render  to  the  company  at  its  main  office  in  California  named  herein 
preliminary  proof  of  loss  consisting  of  a  written  statement  signed  and 
sworn  to  by  him  setting  forth:  (a)  his  knowledge  and  belief  as  to  the 
origin  of  the  fire;  (b)  the  interest  of  the  insured  and  of  all  others  in  the 
property;  (c)  the  cash  value  of  the  different  articles  or  properties  and 
the  amount  of  loss  thereon;  (d)  all  incumbrances  thereon;  (e)  all  other 
insurance,  whether  valid  or  not,  covering  any  of  said  articles  or  prop- 
erties; (f)  a  copy  of  the  descriptions  and  schedules  in  all  other  policies 
unless  similar  to  this  policy,  and  in  that  event,  a  statement  as  to  the 
amounts  for  which  the  different  articles  or  properties  are  insured  in 
each  of  the  other  policies;  (g)  any  changes  of  title,  use,  occupation,  loca- 
tion or  possession  of  said  property  since  the  issuance  of  this  policy; 
(//)  by  whom  and  for  what  purpose  any  building  herein  described,  and 
the  several  parts  thereof,  were  occupied  at  the  time  of  the  fire. 

If  the  company  claims  that  the  preliminary  proof  of  loss  is  defective 
and  within  five  days  after  the  receipt  thereof  (without  admitting  the 
amount  of  loss  or  any  part  thereof)  notifies  in  writing  the  insured,  or 
the  party  making  such  proof  of  loss,  of  the  alleged  defects  (specifically 
stating  them)  and  requests  that  they  be  remedied  by  verified  amend- 
ments the  insured  or  such  party  within  ten  days  after  the  receipt  of  such 
notification  and  request  must  comply  therewith  or,  if  unable  so  to  do, 
present  to  the  company  an  affidavit  to  that  effect. 

The  insured  shall  also  furnish,  if  required,  as  far  as  it  is  practicable 
to  obtain  the  same,  verified  plans  and  specifications  of  any  buildings. 


150  INSURANCE   LAWS   OP   CALIFORNIA. 

fixtures  or  machinery  destroyed  or  damaged ;  and  the  insured  shall 
exhibit  to  any  person  designated  in  writing  by  this  company  all  that 
remains  of  any  property  herein  described  and  shall  submit  to  examina- 
tion under  oath,  as  often  as  required,  by  any  such  person,  and  subscribe 
to  the  testimony  so  given  and  shall  produce  to  such  person  for  examina- 
tion all  books  of  account,  bills,  invoices  and  other  vouchers,  and  permit 
extracts  and  copies  thereof  to  be  made,  and  in  case  the  originals  are  lost 
certified  copies,  if  obtainable,  shall  be  produced. 

Ascertainment  of  amount  of  loss.  This  company  shall  be  deemed  to 
have  assented  to  the  amount  of  the  loss  claimed  by  the  insured  in  his 
preliminary  proof  of  loss,  unless  within  twenty  days  after  the  receipt 
thereof,  or,  if  verified  amendments  have  been  requested,  within  twenty 
days  after  their  receipt,  or  within  twenty  days  after  the  receipt  of  an 
affidavit  that  the  insured  is  unable  to  furnish  such  amendments,  the 
company  shall  notify  the  insured  in  writing  of  its  partial  or  total  dis- 
agreement with  the  amount  of  loss  claimed  by  him  and  shall  also  notify 
him  in  writing  of  the  amount  of  loss,  if  any,  the  company  admits  on 
each  of  the  different  articles  or  properties  set  forth  in  the  preliminary 
proof  or  amendments  thereto. 

If  the  insured  and  this  company  fail  to  agree,  in  whole  or  in  part,  as 
to  the  amount  of  loss  within  ten  days  after  such  notification,  this  com- 
pany shall  forthwith  demand  in  writing  an  appraisement  of  the  loss  or 
part  of  loss  as  to  which  there  is  a  disagreement  and  shall  name  a  com- 
petent and  disinterested  appraiser,  and  the  insured  within  five  days  after 
receipt  of  such  demand  and  name,  shall  appoint  a  competent  and  disin- 
terested appraiser  and  notify  the  company  thereof  in  writing,  and  the 
two  so  chosen  shall  before  commencing  the  appraisement,  select  a  com- 
petent and  disinterested  umpire. 

The  appraisers  together  shall  estimate  and  appraise  the  loss  or  part  of 
loss  as  to  which  there  is  a  disagreement,  stating  separately  the  sound 
value  and  damage,  and  if  they  fail  to  agree  they  shall  submit  their  dif- 
ferences to  the  umpire,  and  the  award  in  writing  duly  verified  of  any 
two  shall  determine  the  amount  or  amounts  of  such  loss. 

The  parties  to  the  appraisement  shall  pay  the  appraisers  respectively 
appointed  by  them  and  shall  bear  equally  the  expense  of  the  appraise- 
ment and  the  charges  of  the  umpire. 

If  for  any  reason  not  attributable  to  the  insured,  or  to  the  appraiser 
appointed  by  him,  an  appraisement  is  not  had  and  completed  within 
ninety  days  after  said  preliminary  proof  of  loss  is  received  by  this  com- 
pany, the  insured  is  not  to  be  prejudiced  by  the  failure  to  make  an 
appraisement,  and  may  prove  the  amount  of  his  loss  in  an  action  brought 
without  such  appraisement. 

Options  of  company  in  case  of  loss.  This  company  may,  at  its  option, 
take  all  or  any  part  of  the  property  for  which  insurance  hereunder  is 
claimed  at  its  ascertained  or  appraised  value,  and  may  also,  at  its  option, 
in  satisfaction  of  its  liability  hereunder,  repair,  rebuild  or  replace  any 
building  or  structure  or  machine  or  machinery  used  therein,  with  other 
of  like  kind  and  quality,  within  a  reasonable  time,  upon  giving  notice 
within  twenty  days  of  its  intention  so  to  do  after  the  receipt  by  it  of  the 
preliminary  proof  of  loss,  or  if  verified  amendments  have  been  requested, 
within  twenty  days  after  their  receipt,  or,  within  twenty  days  after 
the  receipt  of  an  affidavit  that  the  insured  is  unable  to  furnish  such 


STANDARD    FORM    OF    FIRE   INSURANCE   POLICY.  151 

amendments.  There  can  be  no  abandonment  to  this  company  of  any 
property. 

Apportionment  of  loss.  This  company  shall  not  be  liable  under  this 
policy  for  a  greater  proportion  of  any  loss  on  the  described  property,  or 
for  loss  by,  and  expenses  of,  removal  from  the  premises  endangered  by 
fire,  than  the  amount  hereby  insured  bears  to  the  entire  insurance  cover- 
ing such  property  whether  valid  or  not,  or  by  solvent  or  insolvent 
insurers. 

Loss  when  payable.  A  loss  hereunder  shall  be  payable  in  thirty  days 
after  the  amount  thereof  has  been  ascertained  either  by  agreement  or  by 
appraisement ;  but  if  such  ascertainment  is  not  had  or  made  within  sixty 
days  after  the  receipt  by  the  company  of  the  preliminary  proof  of  loss, 
then  the  loss  shall  be  payable  in  ninety  days  after  such  receipt. 

Non-waiver  by  appraisal  or  examination.  This  company  shall  not  be 
held  to  have  waived  any  provision  or  condition  of  this  policy  or  any  for- 
feiture thereof,  by  assenting  to  the  amount  of  the  loss  or  damage  or  by 
any  requirement,  act,  or  proceeding  on  its  part  relating  to  the  appraisal 
or  to  any  examination  herein  provided  for. 

Subrogation.  If  this  company  shall  claim  that  the  fire  was  caused  by 
the  act  or  neglect  of  any  person  or  corporation,  this  company  shall,  on 
payment  of  the  loss  be  subrogated  to  the  extent  of  such  payment  to  all 
right  of  recovery  by  the  insured  for  the  loss  resulting  therefrom,  and 
such  right  shall  be  assigned  to  this  company  by  the  insured  on  receiving 
such  payment. 

Time  for  commencement  of  action.  No  suit  or  action  on  this  policy 
for  the  recovery  of  any  claim  shall  be  sustained,  until  after  full  com- 
pliance by  the  insured  with  all  of  the  foregoing  requirements,  nor  unless 
begun  within  fifteen  months  next  after  the  commencement  of  the  fire. 

Definitions.  Wherever  in  this  policy  the  word  "insured"  occurs,  it 
shall  be  held  to  include  the  legal  representatives  of  the  insured  in  case 
of  his  death,  and  wherever  the  word  "loss"  occurs,  it  shall  be  deemed  the 
equivalent  of  "loss  or  damage,"  and  wherever  the  words  "the  time  of 
loss  or  damage"  are  used  they  shall  be  deemed  the  equivalent  of  "the 
time  of  the  commencement  of  the  fire." 

Sec.  2.  There  shall  be  printed  on  the  outside  fold  of  said  policy  in 
type  not  smaller  than  small  pica  the  following  words  in  this  form : 

READ  THIS  POLICY. 

Ins.  Co.  is  liable  only  for  actual  cash  value. 

Policy  is  void  in  case  of  any  fraud,  false  swearing,  mis- 
representation or  concealment  about  material  facts. 

Policy  is  void,  unless  otherwise  agreed  in  writing,  if 

1st.  It  is  assigned  before  loss ; 

2nd.  Insured  has  or  shall  procure  other  insurance ; 

3rd.  Any  change  occurs  in  location  of  property ; 

4th.  Insured  building  is  on  ground  not  owned  in  fee  simple 
by  insured; 

5th.  Insured  is  not  sole  and  unconditional  owner. 

Policy  is  suspended,  unless  otherwise  agreed  in  writing,  if 

6th.  Described  building  becomes  vacant  or  unoccupied  for 
ten  days; 


152  INSURANCE   LAWS   OP   CALIFORNIA. 

7th.  Mechanics   are   employed   more  than  fifteen   days   in 
repairing  same ; 

8th.  Property  is  or  becomes  encumbered  by  chattel  mort- 
gage; 

9th.  Illuminating  gas  or  vapor  is  generated  in  or  adjacent 
to  described  building; 

10th.  Explosives  or  prohibited  quantities  of  gasoline,  etc.,  are 
kept  on  premises. 

Insurance  ceases  if  described  building  or  any  material  part 
falls  except  as  result  of  fire. 

Policy  does  not  cover  certain  enumerated  personal  property. 
Note  particularly  duty  of  insured  in  case  of  loss ; 
Also  provisions  avoiding  or  suspending  policy,  including 
changes  of  ownership  or  possession. 
Sec.  3.    By  special  agreement  endorsed  on  the  policy  or  added  thereto 
the  provisions  regarding  appraisement  or  apportionment  of  loss  may  be 
waived  and  the  valuations  of  all  or  any  of  the  insured  property  in  case 
of  total  loss  may  be  agreed  upon  in  advance  of  loss. 

Sec.  4.  Said  standard  form  of  policy  shall  be  plainly  printed  and  no 
portion  thereof  shall  be  in  type  smaller  than  small  pica  and  subheads 
shall  be  in  type  larger  than  pica,  and  the  lines  of  the  policy  shall  be 
numbered  consecutively. 

Sec.  5.  This  act  shall  not  apply  to  any  company  organized  under 
an  act  entitled  "  An  act  to  provide  for  the  organization  and  management 
of  county  fire  insurance  companies,"  approved  April  1,  1897,  or  amend- 
ments to  that  act,  but  all  other  fire  insurance  policies  on  property  in 
California  shall  be  on  said  standard  form,  and,  except  as  herein  pro- 
vided, shall  not  contain  additions  thereto.  No  parts  of  the  standard 
form  shall  be  omitted  therefrom. 

Sec.  6.  The  blanks  in  said  standard  form  shall  be  appropriately 
filled.  The  company  may  add  to  the  standard  form  any  matter  relat- 
ing to  its  financial  condition,  directors,  officers,  stockholders  and  his- 
tory, and  the  address  of  its  home  office  and  principal  office  in  the 
United  States;  also  in  red  ink  any  provisions  respecting  any  limita- 
tion of  liability  of  the  company,  its  stockholders  or  members  whicli 
it  is  required  or  permitted  by  the  law  of  the  state  or  country  of  its 
organization  to  insert  in  its  policies. 

Sec.  7.  Clauses  may  be  added  to  the  standard  form  providing  for 
and  defining  the  rights,  duties  and  obligations  of  mortgagees,  assignees 
and  other  parties  who  have  acquired  or  may  acquire  an  interest  in,  right 
to  or  lien  upon  the  insured  property. 

Sec.  8.  No  clause  shall  be  inserted  or  rider  attached  affecting  the 
standard  form  liability  of  the  insurer  for  loss  or  damage  by  fire  occa- 
sioned either  directly  or  indirectly  by  earthquake,  hurricane,  volcanic 
action  or  other  disturbance  of  nature,  unless  the  same  shall  be  printed 
in  red  ink  in  type  larger  than  small  pica  and  at  the  head  of  the  policy 
there  shall  be  printed  in  red  ink  in  large  bold-faced  type  the  words, 
"This  policy  contains  limitations  of  liability  not  permitted  in  the  Cali- 
fornia standard  form." 

Sec.  9.  Clauses  may  be  added  to  the  standard  form  (a)  covering 
property  and  risks  not  otherwise  covered;  (b)  assuming  greater  liability 
than  is  otherwise  imposed  on  the  insurer;  (c)  granting  insured  permits 
and  privileges  not  otherwise  provided;  (d)  waivers  of  any  of  the  mat- 


STANDARD   FORM    OF   FIRE   INSURANCE   POLICY.  153 

ters  avoiding  the  policy  or  suspending  the  insurance;  (<?)  waivers  of 
any  of  the  requirements  imposed  on  the  insured  after  loss. 

Sec.  10.  Except  as  herein  otherwise  provided  clauses  may  be  attached 
to  the  standard  form  by  separate  riders  in  type  larger  than  pica  impos- 
ing specified  duties  and  obligations  upon  the  insured  and  limiting  the 
liability  of  the  insurer. 

Sec.  11.  Any  insurers,  other  than  corporations,  issuing  policies  on 
property  in  California,  shall  use  the  standard  form,  changing  only  such 
words  as  refer  to  the  corporation  or  company  or  to  officers  or  agents  of 
the  corporation  or  company,  and  in  regard  to  its  organization ;  and  such 
other  insurers  may  substitute  in  place  of  such  words  having  peculiar 
reference  to  corporations,  appropriate  words  having  similar  reference 
to  themselves. 

Sec.  12.  Any  insurer,  or  the  agent  countersigning  or  issuing  a  fire 
insurance  policy  covering  in  whole  or  in  part  property  in  California 
varying  from  the  California  standard  form  of  policy  except  as  herein 
provided  is  guilty  of  a  misdemeanor  but  any  policy  so  issued  shall  not- 
withstanding be  binding  upon  the  company  issuing  the  same. 

Sec.  13.  This  act  shall  take  effect  and  be  in  force  from  and  after  the 
first  day  of  August,  1909. 

Clauses  limiting:  the  liability  of  the  insurer  or  imposing  specified  duties  and  obli- 
gations upon  the  insured  may  be  printed  on  separate  sheets,  and  thus  attached  as 
riders  or  such  clauses  may  be  placed  upon  the  same  sheet  of  paper  clearly  separating 
tin'  same.  If  the  last  plan  be  adopted,  however,  I  would  suggest  that  such  clause  be 
introduced  as  follows: 

The  first  clause  be  introduced  by  the  words,  "Rider  No.  1,"  the  second  clause, 
"Rider  No.  2,"  and  so  on.  Each  clause  should  be  introduced  with  its  appropriate 
rider  number:  Opinion  of  the  Attorney  General,  August  19,  1909. 

The  record  owner  of  property,  who  lias  executed  a  contract  for  its  purchase  and 
sale,  received  a  payment  on  the  agreed  purchase  price,  and  under  which  contract  he 
has  permitted  the  prospective  purchaser  of  the  property  to  enter  into  its  possession, 
is  not  the  sole  and  unconditional  owner  of  the  said  property,  although  the  contract 
of  purchase  and  sale  is  not  recorded,  and  the  contract  may  never  be  fully  consum- 
mated. The  vendee  in  possession  under  the  contract  of  purchase  and  sale,  might,  upon 
tender  and  completion  of  the  payments  of  purchase  money  to  the  record  owner,  spe- 
cifically enforce  the  contract,  and  therefore,  the  vendee  has  an  equitable  title  during 
the  period  covered  by  the  contract,  and  which  equitable  title  he  has  the  power  to 
convert  into  a  record  title  and  to  secure  unto  himself  all  the  title  of  the  vendor.  Con- 
sequently, if  the  record  owner  of  the  property  who  has  executed  a  contract  of  purchase 
and  sale,  accepted  a  payment  thereunder  and  suffered  the  party  with  whom  he  has 
contracted  to  enter  into  its  possession  under  the  contract,  insures  the  property  in  his 
own  name,  he  can  not  recover  in  case  of  a  loss  of  the  building  by  fire  under  a  policy 
which  stipulates  that  it  shall  be  void  if  tbe  interest  of  the  insured  is  other  than  that 
of  unconditional  and  sole  ownership.  (Thomas  L.  Sharman  vs.  Continental  Fire 
Insurance  Co.,  47  Cal.  Dec,  page  152.) 

The  fact  that  the  agent  who  solicited  the  insurance  for  the  carrier  knew  of  the 
contract  of  purchase  and  sale  which  had  been  executed  by  the  record  owner  of  the 
property  seeking  insurance,  and  advised  the  owner  of  the  property  that  it  was  proper 
and  correct  to  state  in  the  application  for  insurance  that  he  was  the  unconditional 
and  sole  owner  of  the  property,  does  not  bind  the  insurance  carrier  under  the  terms 
and  conditions  of  a  policy  which  stipulates  that  the  policy  is  void  unless  the  insured 
is  the  unconditional  and  sole  owner,  unless  it  appears  that  the  insurance  carrier  had 
been  notified  of  the  terms  of  the  contract  of  purchase  and  sale  and  accepted  the  insur- 
ance with  this  knowledge,  or  that  the  agent  soliciting  the  insurance  was  in  fact  a 
general  agent  of  the  insurance  carrier  having  the  power  to  vary  the  stipulations  or 
conditions  of  the  policy  of  insurance. 

"The  agent  in  this  case  was  merely  a  soliciting  agent  of  the  defendant.  He  had  no 
authority,  actual  or  ostensible,  to  waive  conditions  in  the  policy.  This  was  not  within 
the  scope  of  any  apparent  authority  he  possessed,  and  his  knowledge  of  the  true  con- 
dition of  the  title  of  plaintiff,  not  communicated  to  the  general  agent  of  the  company, 
w;is  not  the  knowledge  of  the  latter.  The  extent  of  his  duties  was  merely  to  solicit 
insurance  and  send  in  applications  therefor  to  the  general  agent  of  the  defendant. 
He  had  no  authority  to  consummate  the  contract  of  insurance  and  issue  the  policy, 
and  it  is  only  an  agent  of  this  character  who  could  waive  conditions,  notwithstanding 
the  Mpparent  limitations  of  the  power  of  all  agents  to  waive  the  conditions  or  stipula- 
tions of  a  policy.  A  soliciting  agent  could  not."  (Thomas  L.  Sharman  vs.  Conti- 
nental Fire  Insurance  Co.,  47  Cal.  Dec,  page  152.) 


154  INSURANCE   LAWS   OP   CALIFORNIA. 


CIVIL  CODE. 


DIVISION  I.     PART     IV.     TITLE  I.     CHAPTER  VI. 

Designation  of  person  on  whom  process  may  be  served.  Service  on  the  secre- 
tary of  state,  when  valid. 

Sec.  405.  Every  corporation  other  than  those  created  by  or  under  the 
laws  of  this  state  must,  at  the  time  of  filing  the  certified  copy  of  its 
articles  of  incorporation,  file  in  the  office  of  the  secretary  of  state  a  des- 
ignation of  some  person  residing  within  this  state  upon  whom  process 
issued  by  authority  of  or  under  any  law  of  this  state  may  be  served.  A 
copy  of  such  designation,  duly  certified  by  the  secretary  of  state,  is  suffi- 
cient evidence  of  such  appointment.  Such  process  may  be  served  on 
the  person  so  designated  or,  in  the  event  that  no  such  person  is  desig- 
nated, then  on  the  secretary  of  state,  and  the  service  is  a  valid  service  on 
such  corporation. 

Enacted,  Stats.  1905,  p.  630.     Amended,  Stats.  1907,  p.  558. 

Foreign  corporation  must  file  certified  copy  of  articles  of  incorporation  (in 
office  of  secretary  of  state). 

Sec.  408.  Every  corporation  organized  under  the  laws  of  another 
state,  territory,  or  of  a  foreign  country,  which  (1)  is  now  doing  business 
in  this  state,  or  (2)  is  maintaining  an  office  herein,  or  (3)  which  shall 
hereafter  do  business  in  this  state,  or  (4)  maintain  an  office  herein,  or 
(5)  which  shall  enter  this  state  for  the  purpose  of  doing  business  herein, 
must  file  in  the  office  of  the  secretary  of  state  of  the  State  of  California 
(1)  a  certified  copy  of  its  articles  of  incorporation,  or  (2)  of  its  charter, 
or  (3)  of  the  statute  or  statutes,  or  (4)  legislative,  or  executive,  or  gov- 
ernmental act  or  acts  creating  it,  in  cases  where  it  has  been  created  by 
charter,  or  statute,  or  legislative,  or  executive,  or  governmental  act,  duly 
certified  by  the  secretary  of  state,  or  other  officer  authorized  by  the  law 
of  the  jurisdiction  under  which  such  corporation  is  formed  to  certify 
such  copy,  and  (5)  a  certified  copy  thereof,  duly  certified  by  the  secre- 
tary of  state  of  this  state,  (a)  in  the  office  of  the  county  clerk  of  the 
county  where  its  principal  place  of  business  is  located,  and  (b)  also 
where  such  corporation  owns  property. 

Enacted,  Stats.  1905,  p.  630.     Amended,  Stats.  1907,  p.  559. 

Foreign  corporations,  fees  to  be  paid  by,  on  filing  certified  copies  of  articles 
of  incorporation. 

Sec.  409.  For  filing  and  issuing  a  certified  copy  as  required  in  sec- 
tion 408  of  this  code,  corporations  formed  under  the  laws  of  another 
state,  or  of  a  territory,  or  of  a  foreign  country,  must  pay  the  same  fees  as 
are  paid  by  corporations  formed  under  the  laws  of  this  state. 

Enacted,  Stats.  1905.  p.  631. 


FEES  OF  SECRETARY  OF  STATE.  155 


FILINGS  AND  FEES— SECRETARY  OF  STATE. 


POLITICAL  CODE. 

PART  III.     TITLE  I.     CHAPTER  III.     ARTICLE  V. 

Fees  of  secretary  of  state.     Exceptions.     Disposition  of  fees.     State  library 
fund. 

Sec.  409.  The  secretary  of  state,  for  services  performed  in  his  office, 
must  charge  and  collect  the  following  fees : 

1.  For  a  copy  of  any  law,  resolution,  record,  or  other  document  on 
file  in  his  office,  twenty  cents  per  folio. 

2.  For  comparing  a  copy  of  any  law,  resolution,  record,  or  other  docu- 
ment or  paper  with  the  original,  or  the  certified  copy  of  the  original,  on 
file  in  his  office,  five  cents  per  folio. 

3.  For  affixing  certificate  and  seal  of  state,  unless  otherwise  provided 
for,  two  dollars. 

4.  For  filing  articles  of  incorporation,  if  the  capital  stock  amounts  to 
twenty-five  thousand  dollars  or  less,  fifteen  dollars;  if  the  capital  stock 
amounts  to  over  twenty-five  thousand  dollars  and  not  over  seventy-five 
thousand  dollars,  twenty-five  dollars ;  if  "the  capital  stock  amounts  to 
over  scvcnly-five  thousand  dollars,  and  not  over  two  hundred  thousand 
dollars,  fifty  dollars ;  if  the  capital  stock  amounts  to  over  two  hundred 
thousand  dollars,  and  not  over  five  hundred  thousand  dollars,  seventy- 
five  dollars;  if  the  capital  stock  is  over  five  hundred  thousand  dollars, 
and  not  over  one  million  dollars,  one  hundred  dollars;  if  the  capital 
stock  is  over  one  million  dollars,  fifty  dollars  additional  for  every  five 
hundred  thousand  dollars  or  fraction  thereof  of  capital  stock  over  and 
above  one  million  dollars;  for  filing  articles  of  incorporation  without 
capital  stock,  except  cooperative  associations,  five  dollars;  for  filing 
articles  of  incorporation  of  cooperative  associations,  formed  under  the 
act  of  eighteen  hundred  and  ninety-five,  and  acts  supplementary  thereto 
or  amendatory  thereof,  fifteen  dollars. 

5.  For  recording  articles  of  incorporation,  twenty  cents  per  folio. 

6.  For  issuing  certificate  of  incorporation,  three  dollars. 

7.  For  filing  certificate  of  increase  of  capital  stock,  five  dollars  for 
every  fifty  thousand  dollars  or  fraction  thereof  of  such  increase. 

8.  For  filing  certificate  of  decrease  of  capital  stock,  five  dollars. 

9.  For  filing  notice  of  removal  of  principal  place  of  business,  five 
dollars. 

10.  For  filing  amended  articles  of  incorporation,  unless  otherwise 
provided  for,  five  dollars. 

11.  For  filing  certificate  of  creation  of  bonded  indebtedness,  or 
increase  or  decrease  thereof,  five  dollars. 

12.  For  issuing  certificate  of  increase  or  decrease  of  capital  stock, 
three  dollars. 

13.  For  filing  certificate  of  continuance  of  existence,  five  dollars. 

14.  For  issuing  certificate  of  continuance  of  existence,  three  dollars. 


156  INSURANCE   LAWS   OP   CALIFORNIA. 

15.  For  filing  claim  to  trade-mark,  and  issuing  certificate  of  filing, 
five  dollars. 

16.  For  issuing  certificate  of  filing  of  any  document,  not  otherwise 
provided  for,  three  dollars. 

17.  For  filing  certificate  of  increase  or  decrease  of  number  of  direct- 
ors, five  dollars. 

18.  For  issuing  certificate  of  increase  or  decrease  of  number  of  direct- 
ors, three  dollars. 

19.  For  receiving  and  recording  each  official  bond,  five  dollars. 

20.  For  filing  notice  of  appointment  of  agent,  five  dollars. 

21.  For  each  commission,  passport,  or  other  document  signed  by  the 
governor  and  attested  by  the  secretary  of  state  (pardons,  military  com- 
missions, commissions  issued  to  non-salaried  state  officers,  and  extra- 
dition papers  excepted),  five  dollars. 

22.  For  each  patent  for  land  issued  by  the  governor,  if  for  one  hun- 
dred and  sixty  acres  or  less,  one  dollar;  and  for  each  additional  one 
hundred  and  sixty  acres,  or  fraction  thereof,  one  dollar. 

23.  For  issuing  certificate  of  official  character,  two  dollars. 

24.  For  recording  miscellaneous  documents  or  papers,  twenty  cents 
per  folio. 

25.  For  filing  certified  copy  of  order  and  decree  of  court,  changing 
name,  or  certified  copy  of  order  and  decree  of  court,  dissolving  a  corpo- 
ration, five  dollars. 

No  member  of  the  legislature  or  state  officer  shall  be  charged  for  any 
search  relative  to  matters  appertaining  to  the  duties  of  his  office;  nor 
shall  he  be  charged  any  fee  for  a  certified  copy  of  any  law  or  resolution 
passed  by  the  legislature  relative  to  his  official  duties. 

All  fees  collected  by  the  secretary  of  state  must,  at  least  once  each 
week,  be  paid  into  the  state  treasury. 

Enacted  March  12,  1872.  Amended,  Stats.  1881,  p.  65;  Stats.  1895, 
p.  63;  Stats.  1901,  p.  86;  Stats.  1903,  p.  27;  Stats.  1905,  p.  623;  Stats. 
1907,  p.  352.  Amended  and  changed  from  416  to  409,  Stats.  1911,  p.  573. 
Amended,  Stats.  1913,  p.  90. 


CHAPTER  218. 
An  act  to  regulate  the  organization  of  fraternal  insurance  associations. 
[Approved  June  3,  1913 ;  Stats.  1913,  p.  372.] 
The  people  of  the  State  of  California  do  enact  as  follows: 

Section  1.  Secret,  fraternal  societies,  having  lodges,  councils  or 
granges  in  this  state,  and  conducting  their  business  and  securing  their 
membership  on  the  lodge,  council  or  grange  system  exclusively,  and 
having  ritualistic  work  and  ceremonies  in  their  societies,  lodges,  councils 
or  granges,  may  form  an  association  of  the  members  of  their  order  or 
society,  binding  themselves  to  contribute  to  each  other's  loss  by  fire. 

Sec.  2.  Such  association  shall  be  formed  by  filing  a  verified  cer- 
tificate in  the  office  of  the  secretary  of  state  and  by  filing  a  like  certifi- 
cate in  the  office  of  the  clerk  of  each  county  in  which  a  member  has  prop- 
erty insured  in  said  association ;  such  certificate  shall  state  generally 
the  objects  of  the  association,  and  shall  state  its  principal  place  of  busi- 


FRATERNAL  INSURANCE  ASSOCIATIONS.  157 

ness,  the  names  of  its  officers,  who  shall  be  members  of  said  association 
having  property  insured  therein;  such  certificates  shall  be  signed  by 
said  officers  and  verified  by  at  least  three  of  them. 

Sec.  3.  An  association  formed  as  prescribed  in  sections  one  and  two 
of  this  act  may  insure  the  property  of  its  members  against  loss  or  dam- 
age by  fire  for  an  amount  not  exceeding  forty-five  hundred  dollars  on 
any  one  risk,  and  no  risk  of  more  than  thirty-five  hundred  dollars  shall 
be  binding  until  risks  to  the  amount  of  two  hundred  thousand  dollars 
have  been  written  and  all  premiums  paid  thereon,  and  no  risk  of  more 
than  fifteen  hundred  dollars  shall  be  binding  until  risks  to  the  amount 
of  one  hundred  thousand  dollars  have  been  written  and  all  premiums 
paid  thereon,  and  no  risk  of  any  amount  shall  be  binding  until  risks  to 
the  amount  of  seventy-five  thousand  dollars  have  been  written  and  all 
premiums  paid  thereon.  And  no  risk  shall  be  written  by  such  associa- 
tion except  for  members  in  good  standing  on  the  books  of  the  order  or 
society  forming  the  association  and  a  suspension  or  withdrawal  from 
membership  in  such  order  or  society  will  suspend  the  insurance  risk 
until  the  member  is  restored  to  good  standing  in  said  order  or  society 
and  in  said  association ;  provided,  that  a  restoration  to  membership  after 
suspension  therefrom  shall  in  no  case  be  construed  as  extending  the 
term  of  the  risk.  No  risk  written  by  such  association  shall  be  for  an 
amount  in  excess  of  seventy-five  per  centum  of  the  cash  value  of  the 
property  insured,  and  no  concurrent  or  additional  insurance  shall  be 
allowed. 

Sec.  4.  Such  association  by  and  in  its  own  name  may  sue  and  be 
sued,  may  loan  such  funds  as  it  may  have  on  hand  in  such  manner  as 
its  articles  of  association  and  its  by-laws  have  provided  for;  may  own 
sufficient  real  estate  for  its  business  purposes,  and  such  other  real  estate 
as  may  be  necessary  to  purchase  on  foreclosure  of  its  mortgages;  pro- 
vided,  such  real  estate  so  obtained  by  foreclosure  shall  be  sold  and  con- 
veyed within  five  years  from  the  time  title  vests  in  said  association. 

Sec.  5.  Such  association  may  make  such  by-laws,  not  inconsistent 
with  the  laws  of  this  state,  as  may  be  necessary  for  its  government  and 
for  the  transaction  of  its  business,  and  such  association  merely  creating 
a  mutual  bond  and  agreement  of  its  members  to  participate  in  each 
other's  loss  by  fire  does  not  come  under  the  insurance  laws  of  California, 
Outside  of  the  requirements  of  this  act,  their  own  regulations  and  those 
of  the  order  to  which  they  belong  are  sufficient. 

Sec.  6.  All  persons  insured  shall  give  their  obligation  to  the  associa- 
tion, binding  themselves,  their  heirs  and  assigns  to  pay  their  pro  rata 
share,  proportioned  to  the  amount  of  insurance  in  the  association  held 
by  them,  at  the  time  of  the  loss  to  the  association,  of  the  necessary 
expenses  and  of  loss  by  fire  which  may  be  sustained  by  any  member 
thereof  during  the  time  for  which  their  respective  policies  are  written, 
and  said  policies  may  be  cancelled  by  either  party  thereto,  in  which  case 
settlement  or  adjustment  shall  be  made  in  accordance  with  the  terms  of 
the  by-laws  of  the  association,  and  they  shall  also  at  the  time  of  effect- 
ing the  insurance  pay  such  a  percentage  in  cash,  and  such  other  charges, 
as  may  be  required  by  the  rules  or  by-laws  of  the  association. 

Sec.  7.  All  such  associations  must  classify  the  property  insured 
therein  at  the  time  of  issuing  policies  thereon  under  different  rates,  cor- 
ns ponding  as  nearly  as  may  be  to  the  greater  or  less  risk  from  fire  loss 


158  INSURANCE   LAWS   OP   CALIFORNIA. 

which  may  be  attached  to  the  several  kinds  of  property  insured.  No 
such  association  shall  issue  policies  of  insurance  on  any  property  within 
the  limits  of  cities  of  the  first,  first  and  a  half,  second,  third,  fourth, 
fifth  and  sixth  classes;  provided,  that  no  dwelling  shall  be  insured 
within  the  corporate  limits  of  any  city  or  town  exposed  by  any  other 
building  within  one  hundred  feet  or  by  any  risk  other  than  a  dwelling 
or  private  barn  within  two  hundred  feet  of  the  risk  assured. 

Sec.  8.     Such  association  shall  provide  in  its  by-laws  for  the  ascer- 
tainment of  loss  or  damage  by  fire,  and  for  the  payment  thereof. 


CHAPTER  266. 

An  act  prohibiting  the  borrowing  of  money  from  an  insurance  company  by  an 
officer  of  such  company. 

[Approved  June  6,  1913 ;  Stats.  1913,  p.  468.] 
The  people  of  the  State  of  California  do  enact  as  follows: 

Section  1.  No  officer  of  any  insurance  company  shall,  directly  or 
indirectly,  for  himself  or  as  a  partner  or  agent  for  others,  borrow  any 
of  the  funds  of  such  insurance  company;  provided,  however,  that  the 
provisions  of  this  act  shall  not  be  construed  to  prevent  the  borrowing 
by  any  insured  upon  the  security  of  policies  of  insurance  in  accordance 
with  their  terms,  nor  prevent  agents  of  life  insurance  companies  from 
receiving  advances  under  their  agency  contracts. 

Sec.  2.  Any  officer  who  acts  in  violation  of  the  provisions  of  this 
act  shall  be  guilty  of  a  misdemeanor. 


CHAPTER  330. 

An  act  to  provide  for  a  notice  to  be  printed  on  the  cover  of  the  policies  of  all 
insurance  companies,  associations  or  societies  relating  to  future  assessments. 

[Approved  June  6,  1913 ;  Stats.  1913,  p.  674.] 
The  people  of  the  State  of  California  do  enact  as  follows: 

Section  1.  Every  insurance  policy  issued  in  this  state  under  the 
terms  of  which  the  insured  named  in  such  policy  is  liable  in  any  event 
to  pay  an  assessment  in  addition  to  the  premium  stated  in  the  policy, 
shall  have  conspicuously  printed  upon  the  back  or  the  outside  cover 
thereof,  under  the  name  of  the  corporation,  association,  society  or  per- 
sons issuing  the  same,  in  plain  type,  the  words :  *  'Notice ;  under  the  terms 
of  this  policy  insured  is  liable  for  future  assessments. ' ' 

Provided,  however,  that  the  provisions  of  this  section  shall  not  apply 
to  any  policy  of  a  mutual  fire  insurance  company. 

Sec.  2.  On  a  violation  of  the  provisions  of  this  act  by  any  insurance 
company,  association  or  society,  the  insurance  commissioner  shall  forth- 
with revoke  the  certificate  of  authority  of  such  company,  association  or 
society,  for  a  period  of  not  less  than  one  year. 


BONDS   OP   IRRIGATION    DISTRICTS.  159 


CHAPTER  366. 


Ail  act  relating  to  bonds  of  irrigation  districts,  providing  under  what  circum- 
stances such  bonds  shall  be  legal  investments  for  funds  of  banks,  insurance 
companies  and  trust  companies,  trust  funds,  state  school  funds  and  any 
money  or  funds  which  may  now  or  hereafter  be  invested  in  bonds  of  cities, 
cities  and  counties,  counties,  school  districts  or  municipalities,  and  providing 
under  what  circumstances  the  use  of  bonds  of  irrigation  districts  as  security 
for  the  performance  of  any  act  may  be  authorized. 

[Approved  June  13,  1913;  Stats.  1913,  p.  778.] 
The  people  of  the  State  of  California  do  enact  as  follows: 

Section  1.  Whenever  the  board  of  directors  of  any  irrigation  dis- 
trict organized  and  existing  under  and  pursuant"  to  the  laws  of  the  State 
of  California  shall  by  resolution  declare  that  it  deems  it  desirable  that 
any  contemplated  or  outstanding  bonds  of  said  district,  including  any  of 
its  bonds  authorized  but  not  sold,  shall  be  made  available  for  the  pur- 
poses provided  for  in  section  7  of  this  act,  the  said  board  of  directors 
shall  thereupon  file  a  certified  copy  of  such  resolution  with  the  commis- 
sion hereinafter  provided  for. 

Sec.  2.  Such  commission,  upon  the  receipt  of  a  certified  copy  of  such 
resolution,  shall,  without  delay,  make  or  cause  to  be  made  an  investiga- 
tion of  the  affairs  of  the  district  and  report  in  writing  upon  such  matters 
as  it  may  deem  essential,  and  particularly  upon  the  following  points : 

(a)  The  supply  of  water  available  for  the  project  and  the  right  of 
the  district  to  so  much  water  as  may  be  needed. 

(b)  The  nature  of  the  soil  as  to  its  fertility  and  susceptibility  to 
irrigation,  the  probable  amount  of  water  needed  for  its  irrigation  and 
the  probable  need  of  drainage. 

(c)  The  feasibility  of  the  district's  irrigation  system  and  of  the 
specific  project  for  which  the  bonds  under  consideration  are  desired  or 
have  been  used,  whether  such  system  and  project  be  constructed,  pro- 
jected or  partially  completed. 

(d)  The  reasonable  market  value  of  the  water,  water  rights,  canals, 
reservoirs,  reservoir  sites  and  irrigation  works  owned  by  such  district  or 
to  be  acquired  or  constructed  by  it  with  the  proceeds  of  any  of  such 
bonds. 

(e)  The  reasonable  market  value  of  the  lands  included  within  the 
boundaries  of  the  district. 

(/*)  Whether  or  not  the  aggregate  amount  of  the  bonds  under  con- 
sideration and  any  other  outstanding  bonds  of  said  district,  including 
bonds  authorized  but  not  sold,  exceeds  sixty  per  centum  of  the  aggregate 
market  value  of  the  lands  within  said  district  and  of  the  water,  water 
rights,  canals,  reservoirs,  reservoir  sites,  and  irrigation  works  owned,  or 
to  be  acquired  or  constructed  with  the  proceeds  of  any  of  said  bonds,  by 
said  district,  as  determined  in  accordance  with  paragraphs  (d)  and  (e) 
in  this  section. 

(g)  The  numbers,  date  or  dates  of  issue  and  denominations  of  the 
bonds,  if  any,  which  the  commission  shall  find  are  available  for  the  pur- 
poses provided  for  in  section  7  of  this  act,  and,  if  the  investigation  has 
covered  contemplated  bonds,  the  total  amount  of  bonds  which  the  dis- 
trict can  issue  without  exceeding  the  limitation  expressed  in  paragraph 
(/)  of  this  section. 


160  INSURANCE   LAWS   OP    CALIFORNIA. 

Sec.  3.  The  written  report  of  the  investigation  herein  provided  for 
shall  be  filed  in  the  office  of  the  state  controller,  and  a  copy  of  said 
report  shall  by  the  commission  be  forwarded  to  the  secretary  of  the 
district  for  which  the  investigation  shall  have  been  made,  and  if  said 
commission  shall  have  found,  as  set  out  in  said  report,  that  the  irriga- 
tion system  of  the  district  and  the  specific  project  for  which  the  bonds 
under  consideration  are  desired  or  have  been  used,  whether  such  project 
be  constructed,  projected  or  partially  completed,  are  feasible  and  that 
the  aggregate  amount  of  the  bonds  under  consideration  and  any  other 
outstanding  bonds  of  said  district,  including  bonds  authorized  but  not 
sold,  does  not  exceed  sixty  per  centum  of  the  aggregate  market  value  of 
the  lands  within  said  district  and  of  the  water,  water  rights,  canals, 
reservoir,  reservoir  sites,  and  irrigation  works  owned  or  to  be  acquired 
or  constructed  with  the  proceeds  of  any  of  said  bonds  by  said  district, 
the  bonds  of  such  irrigation  district,  as  described  and  enumerated  in  said 
report  filed  with  the  state  controller,  shall  be  certified  by  the  state  con- 
troller, as  hereinafter  provided  for.  If  the  commission  shall  be  notified 
by  the  board  of  directors  of  any  district  whose  irrigation  system  has  been 
found  in  such  report  to  be  feasible  that  the  district  has  issued  bonds  and 
the  commission  shall  find  that  said  bonds  are  for  any  project  or  projects 
approved  in  such  report  and  that  the  amount  of  said  bonds  does  not 
exceed  the  limitation  stated  in  such  report,  the  commission  shall  prepare 
and  file  with  the  state  controller  a  supplementary  report  giving  the 
numbers,  date  or  dates  of  issue  and  denominations  of  said  bonds,  which 
shall  then  be  entitled  to  certification  by  the  state  controller  as  hereinafter 
provided  for.  Subsequent  issues  of  bonds  may  be  made  available  for  the 
purposes  specified  in  this  act  upon  like  proceedings  by  said  district,  but, 
after  any  of  the  bonds  of  an  irrigation  district  have  been  enumerated  and 
described  as  entitled  to  certification  by  the  state  controller  as  herein 
provided  for,  it  shall  be  unlawful  for  that  district  to  issue  bonds  that 
will  not  be  entitled  to  such  certification.  It  is  hereby  made  the  duty  of 
the  state  controller  to  provide  for  filing  and  preserving  the  reports  men- 
tioned in  this  section  and,  also,  to  make,  keep  and  preserve  a  record  of 
the  bonds  certified  by  him  in  accordance  with  the  provisions  of  section 
four  of  this  act,  including  the  date  of  certification,  the  legal  title  of  the 
district,  the  number  of  each  bond,  its  par  value,  the  date  of  its  issue  and 
that  of  its  maturity. 

Sec.  4.  Whenever  any  bond  of  an  irrigation  district  organized  and 
existing  as  aforesaid,  including  any  bond  authorized  in  any  such  district 
but  not  sold,  which  shall  be  eligible  to  certification  by  the  state  con- 
troller under  section  three  of  this  act'  shall  be  presented  to  the  state 
controller,  he  shall  cause  to  be  attached  thereto  a  certificate  in  substan- 
tially the  following  form : 

Sacramento,  Cal.  (insert  date.) 

I, ,  controller  of  the  State  of  California,  hereby  certify  that 

the  within  bond,  No.____  of  issue  No of  the irrigation 

district,  issued ,__  (insert  date),  is,  in  accordance  with  an  act  of 

the  legislature  of  California  approved ,  a  legal  investment 

for  all  trust  funds  and  for  the  funds  of  all  insurance  companies,  banks, 
both  commercial  and  savings,  trust  companies,  the  state  school  funds  and 
any  funds  which  may  be  invested  in  county,  municipal  or  school  district 


BONDS    OF   IRRIGATION    DISTRICTS.  161 

bonds,  and  it  may  be  deposited  as  security  for  the  performance  of  any 
act  whenever  the  bonds  of  any  county,  city,  city  and  county,  or  school 
district  may  be  so  deposited,  it  being  entitled  to  such  privileges  by  virtue 
of  an  examination  by  the  state  engineer,  the  attorney  general  and  the 
superintendent  of  banks  of  the  State  of  California  in  pursuance  of  said 
act.  The  within  bond  may  also,  according  to  the  Constitution  of  the 
State  of  California,  be  used  as  security  for  the  deposit  of  public  money 
in  banks  in  said  state. 


Controller  of  State  of  California. 

In  case  of  a  change  in  the  constitution  or  any  of  the  laws  of  this  state 
relating  to  the  bonds  of  irrigation  districts,  the  state  controller  shall,  if 
necessary,  modify  the  above  certificate  so  that  it  shall  conform  to  the 
facts. 

Sec.  5.  The  attorney  general,  the  state  engineer  and  the  superin- 
tendent of  hanks  are  hereby  constituted  the  commission  herein  provided 
for,  and  said  commission  shall  elect  one  of  its  members  chairman  and  may 
employ  such  clerks  and  assistants  as  may  be  necessary  for  the  perform- 
ance of  the  duties  herein  imposed,  and  may  fix  the  compensation  to  be 
paid  to  such  clerks  and  assistants. 

Sec.  6.  All  necessary  expenses  incurred  in  making  the  investigation 
and  report  in  this  act  provided  for  shall  be  paid  as  the  commission  may 
require  by  the  irrigation  district  whose  property  has  been  investigated 
and  reported  on  by  the  said  commission;  provided,  that  the 'benefit  of 
any  services  that  may  have  been  performed  and  any  data  that  may  have 
been  obtained  by  any  member  of  said  commission  or  any  other  public 
official  in  pursuance  of  the  requirements  of  any  law  other  than  this  act, 
shall  be  available  for  the  use  of  the  commission  herein  provided  for 
without  charge  to  the  district  whose  affairs  are  under  investigation. 

Sec.  7.  All  bonds  certified  in  accordance  with  the  terms  of  this  act 
shall  be  legal  investments  for  all  trust  funds,  and  for  the  funds  of  all 
insurance  companies,  banks,  both  commercial  and  savings,  and  trust 
companies,  and  for  the  state  school  funds,. and  whenever  any  money  or 
funds  may.  by  law  now  or  hereafter  enacted,  be  invested  in  bonds  of 
cities,  cities  and  counties,  counties,  school  districts,  or  municipalities  in 
the  State  of  California,  such  money  or  funds  may  be  invested  in  the 
said  bonds  of  irrigation  districts,  and  whenever  bonds  of  cities,  cities 
and  counties,  counties,  school  districts  or  municipalities  may  by  any 
law  now  or  hereafter  enacted  be  used  as  security  for  the  performance  of 
any  act,  bonds  of  irrigation  districts  under  the  limitations  in  this  act 
provided  may  be  so  used.  This  act  is  intended  to  be  and  shall  be  con- 
sidered the  latest  enactment  upon  the  matters  herein  contained,  and  any 
and  all  acts  in  conflict  with  the  provisions  hereof  are  hereby  repealed. 


11— IL 


162  INSURANCE   LAWS   OF   CALIFORNIA. 


CHAPTER  177. 


An  act  providing  for  the  organization  and  management  of  mutual  work- 
men's compensation  insurance  companies  and  defining  the  same  and  regu- 
lating the  transaction  of  the  business  of  mutual  workmen's  compensation 
insurance  in  the  State  of  California. 

[Approved  May  26,  1913;  Stats.  1913,  p.  321.] 
The  people  of  the  State  of  California  do  enact  as  follows: 

Section  1.  The  term  "  compensation ' '  as  used  in  this  act  shall  mean 
and  include  any  liability  imposed  upon  any  or  all  employers  of  labor  to 
compensate  their  employees  and  the  dependents  of  such  employees  for 
any  injury  sustained  by  the  said  employees  by  accident  arising  out  of 
and  in  the  course  of  their  employment  irrespective  of  the  fault  of  either 
party.  The  term  ''employer"  as  used  in  this  act  shall  be  construed  to 
mean:  Every  person,  firm,  voluntary  association  and  private  corpora- 
tion (including .any  public  service  corporation)  who  has  any  person  in 
service  under  any  appointment  or  contract  of  hire  or  apprenticeship, 
express  or  implied,  oral  or  written,  and  the  legal  representatives  of  any 
deceased  employer.  The  term  "employee"  as  used  in  this  act  shall  be 
construed  to  mean :  Every  person  in  the  service  of  an  employer  as 
defined  by  this  act  under  any  appointment  or  contract  of  hire  or  appren- 
ticeship, express  or  implied,  oral  or  written,  including  aliens  and  also 
including  minors. 

Sec.  2.  (a)  Mutual  associations  of  any  number  of  employers,  not 
less  than  five,  may,  subject  to  the  approval  of  the  insurance  commis- 
sioner, be  formed  by  incorporating  under  the  laws  of  this  state,  for  the 
purpose  of  insuring  their  members  against  liability  for  compensation 
and  insuring  to  the  employees  of  such  members  the  payment  of  such 
compensation. 

(6)  It  shall  be  within  the  power  of  the  insurance  commissioner  to 
limit  the  membership  of  any  such  mutual  association  to  those  employers 
engaged  in  the  same  general  character  of  industry  or  to  employers 
within  a  limited  part  of  the  state,  whenever  in  his  judgment  such  limi- 
tation shall  be  required  for  the  protection  of  the  members  of  such  asso- 
ciation or  persons  insured. 

Sec.  3.  Before  the  articles  of  incorporation  shall  be  filed,  a  copy 
thereof  shall  be  submitted  for  the  approval  of  the  insurance  commis- 
sioner.    Such  articles  shall  set  forth : 

First — The  names  of  the  employers  entering  into  such  association, 
their  places  of  residence,  the  nature  of  the  business  in  which  they  are 
engaged  and  the  number  of  persons  employed  by  each. 

Second — The  name  by  which  such  association  shall  be  known,  which 
name  shall  include  the  word  "mutual,"  and,  if  the  liability  of  members 
is  limited,  the  words  "limited  mutual." 

Third — The  period  for  which  such  association  is  incorporated,  which 
shall  not  exceed  fifty  years. 

Fourth — The  number  of  directors,  which  shall  not  be  less  than  five 
(5)  nor  more  than  eleven  (11),  and  the  names  and  residences  of  the 
directors  for  the  first  year. 

Fifth — The  location  of  the  principal  place  of  business,  which  shall  be 
in  this  state. 


163 

Such  articles  must  be  executed,  acknowledged,  and  filed  as  provided 
by  law  for  the  formation  of  other  corporations. 

Sec.  4.  The  members  of  any  company  organized  under  this  act  shall 
have  power  to  make  such  by-laws,  not  inconsistent  with  the  constitution 
and  laws  of  this  state,  as  may  be  deemed  necessary  for  the  government 
of  its  officers  and  members,  for  the  admission  of  new  member*,  for  the 
assessment  and  collection  of  premiums  and  assessments  and  in  general 
for  the  proper  conduct  of  its  affairs.  Such  by-laws  shall  not  be  effective 
until  a  copy  thereof  has  been  filed  with  the  insurance  commissioner  and 
approved  by  him. 

Sec.  5.  Every  employer  accepting  a  policy  in  any  company  organ- 
ized under  this  act  shall  thereby  become  a  member  of  such  company  and 
shall  become  liable  for  his  proportionate  share  of  losses  and  operating 
expenses  as  hereinafter  provided. 

Sec.  6.  No  policy  shall  be  issued  by  any  company  organized  under 
this  act  until  subscriptions  for  insurance  have  been  received  from  at 
least  one  hundred  employers  having  an  annual  pay  roll  of  at  least 
$500,000.00  or  having  in  their  employment  at  least  one  thousand  em- 
ployees, nor  until  an  amount  in  cash  shall  be  in  hand  over  and  above  all 
liabilities  other  than  the  unearned  premium  reserve  of  not  less  than 
fifteen  thousand  dollars  and  in  any  event  not  less  than  one  full  annual 
premium  upon  each  risk.  If  at  any  time  the  number  of  employers 
insured  shall  fall  below  one  hundred  or  if  the  annual  pay  roll  of  said 
employers  shall  fall  below  $500,000.00  and  the  number  of  their  said 
employees  shall  fall  below  one  thousand  then  no  further  policies  shall 
be  issued  until  subscriptions  have  been  received  sufficient  to  comply  with 
the  requirements  of  this  section. 

Sec.  7.  No  single  risk  shall  be  insured  by  any  company  organized 
under  this  act  upon  which  the  premium  charged  is  more  than  two  per 
cent  of  the  premiums  charged  upon  all  the  policies  that  the  company  has 
in  force. 

Sec.  8.  After  a  compensation  insurance  rate  shall  have  been  estab- 
lished by  the  state  workmen's  compensation  insurance  rating  bureau  no 
mutual  company  organized  under  this  act  shall  charge  a  lesser  rate  upon 
any  risk  than  the  gross  bureau  rates  applicable  thereto. 

Sec.  9.  Every  company  organized  under  this  act  shall  in  its  by-laws 
and  policies  fix  the  contingent  mutual  liability  of  its  members  for  the 
payment  of  losses  in  excess  of  its  available  cash  funds;  but  such  con- 
tingent liability  shall  not  be  less  than  an  amount  equal  to  one  annual 
premium  in  addition  to  the  annual  premium  charged. 

Sec.  10.  Every  company  organized  under  this  act  shall  be  subject  to 
all  the  general  provisions  of  the  law  relative  to  other  insurance  com- 
panies and  also  to  the  general  provisions  of  law  applicable  to  all  other 
corporations  in  so  far  as  such  provisions  are  not  inconsistent  or  in  con- 
flict with  the  provisions  of  this  act. 

Sec.  11.  If  any  company  organized  under  this  act  is  not  possessed 
of  cash  funds  above  its  unearned  premium  reserve  and  claims  reserve 
and  other  liabilities  sufficient  for  the  payment  of  incurred  losses  and 
expenses  it  shall  make  an  assessment  for  the  amount  needed  to  pay  such 
losses  and  expenses  upon  its  members  liable  to  assessment  therefor  in 
proportion  to  their  several  liabilities.  The  company  shall  cause  to  be 
recorded  in  a  book  kept  for  that  purpose  the  order  for  such  assessment 


164  INSURANCE  LAWS   OP   CALIFORNIA. 

and  the  amount  of  the  assessment  called  for,  together  with  a  statement 
setting  forth  the  condition  of  the  company  at  the  date  of  the  order,  the 
amount  of  its  cash  assets  and  contingent  funds.  Such  record  shall  be 
made  and  signed  by  the  directors  or  other  persons  who  voted  for  the 
order  and  approved  by  the  insurance  commissioner  before  any  part  of 
the  assessment  is  collected  and  any  person  liable  to  assessment  may 
inspect  and  take  a  copy  of  the  same. 

Sec.  12.  The  directors  of  every  such  mutual  company  shall  each  year 
set  aside  as  a  surplus  an  amount  equal  to  at  least  twenty-five  per  cent  of 
all  available  profits  until  such  surplus  shall  be  an  amount  not  less  than 
the  amount  of  all  premiums  charged  upon  all  insurance  in  force  after 
deducting  therefrom  the  amount  of  premiums  charged  for  any  risks 
which  have  been  reinsured  in  other  insurance  carriers.  After  setting 
aside  the  amount  of  profits  required  to  be  set  aside  by  this  section  as  a 
surplus  fund,  the  directors  of  every  such  mutual  association,  at  such 
times  as  their  by-laws  provide,  must  make,  declare  and  pay  to  their 
members  dividends  of  so  much  of  the  additional  available  profits 
accrued  from  the  business  of  the  association  and  interest  on  moneys 
invested  as  to  them  appears  advisable;  provided,  however,  that  no  such 
dividend  shall  be  declared  or  paid  unless  there  is  then  on  hand  a  sur- 
plus of  not  less  than  $15,000  and  equal  to  at  least  twenty-five  per  cent 
of  all  premiums  charged  upon  all  insurance  in  force  after  deducting 
therefrom  the  amount  of  premiums  charged  for  any  risks  which  may 
have  been  reinsured  in  other  insurance  carriers. 

Sec.  13.  No  assessment  shall  be  levied  and  no  dividend  shall  be 
declared  until  such  assessment  or  such  dividend  has  been  approved  by 
the  insurance  commissioner. 

Sec.  14.  The  funds  of  any  company  organized  under  this  act  shall 
be  invested  in  the  manner  allowed  for  the  investment  of  the  funds  of 
other  insurance  companies. 

Sec.  15.  The  expenses  for  any  calendar  year  of  any  company  organ- 
ized under  this  act,  including  commissions  and  fees  to  agents  and  officers, 
but  not  including  expenses  incurred  for  the  prevention  of  injuries, 
shall  be  limited  to  thirty  per  cent  of  the  gross  premiums  actually 
received  during  that  year.  A  violation  of  this  provision  shall  render  the 
officers  and  directors  and  all  persons  having  similar  powers  jointly  and 
severally  liable  to  such  company  for  any  amount  used  for  expenses  in 
excess  of  the  amount  provided  for  in  this  section.  In  the  event  that 
such  company  fails  or  refuses  to  recover  such  moneys  so  paid  the  insur- 
ance commissioner  may  sue  for  and  recover  the  same  from  any  one  or  all 
of  the  officers  or  directors  and  all  persons  having  similar  powers  of  such 
company  for  the  benefit  of  its  members.  No  officer  or  other  person, 
whose  duty  it  is  to  determine  the  character  of  the  risks,  and  to  decide 
what  applications  shall  be  accepted  and  what  applications  shall  be 
rejected  by  such  company,  shall  receive  as  any  part  of  his  compensation 
a  commission  upon  the  premiums,  but  his  compensation  shall  be  a  fixed 
salary  and  such  share  of  the  net  profits  as  the  directors  or  trustees  may 
determine. 

Sec.  16.  Whenever  the  liabilities  of  any  company  organized  under 
this  act  for  losses  reported,  expenses,  taxes,  unearned  premium  reserve 
and  claims  reserve  are  greater  than  its  admitted  cash  assets  then  such 
company  is  insolvent. 


MUTUAL   WORKMEN'S   COMPENSATION   INSURANCE.  165 

Sec.  17.  Every  company  organized  under  this  act  shall  file  with  the 
insurance  commissioner  on  or  before  the  first  day  of  March  of  each  year, 
its  financial  statement  exhibiting  its  condition  on  the  thirty-first  day  of 
December  next  preceding-.  Such  statement  shall  be  made  as  provided 
for  in  the  blanks  furnished  by  the  insurance  department. 

Sec.  18.  The  directors  of  any  company  organized  under  this  act 
shall  make  and  enforce  reasonable  rules  and  regulations  for  the  pre- 
vention of  injuries  on  the  premises  of  members  and  for  this  purpose  the 
inspectors  of  the  company  shall  have  free  access  to  all  such  premises 
during-  regular  working  hours.  Any  employer  or  employee  aggrieved 
by  any  such  rule  or  regulation  may  petition  the  industrial  accident  com- 
mission for  a  review,  and  it  may  affirm,  amend  or  annul  the  rule  or 
regulation. 

Sec.  19.  Auditors,  inspectors  and  other  agents  of  the  company  shall 
have  free  access  to  the  wages,  accounts  and  pay  rolls  of  members  for  the 
purpose  of  verifying  pay  rolls. 

Sec.  20.  Any  member  of  any  company  organized  under  this  act  may 
withdraw  at  any  time  by  giving  thirty  days  written  notice  of  his  inten- 
tion to  withdraw  and  surrendering  his  policy;  provided,  however,  that 
he  shall  discharge  all  his  obligations  to  the  company  at  the  time  of  his 
withdrawal.  The  termination  of  such  insurance  shall  not  act  to  release 
the  member  withdrawing  from  liability  for  the  payment  of  his  assigned 
share  of  all  assessments  then  or  thereafter  made  to  make  up  deficiencies 
due  to  accidents  happening  while  he  was  insured  in  such  company.  The 
premium  for  such  surrendered  policy  shall  be  returned  to  the  member 
withdrawing  less  the  customary  short  term  premium  for  a  time  during 
which  the  policy  was  in  force.  The  company  shall  have  power  to  cancel 
or  determine  any  policy  by  giving  the  insured  five  days'  written  notice 
to  that  effect  and  returning  to  the  insured  his  pro  rata  part  of  the 
premium. 

Sec.  21.  Any  company  organized  under  this  act  shall  have  power  to 
amend  its  articles  of  association  and  by-laws  at  its  regular  annual  meet- 
ing or  ;it  special  meetings  called  and  held  as  provided  in  its  by-laws, 
hut  s?iid  amendments  shall,  before  they  become  operative,  be  approved 
;iiid  filed  in  the  same  manner  as  the  original  articles  and  by-laws. 

Sec  22.  Any  company  organized  under  this  act  shall  have  power  to 
own.  hold  and  acquire  such  real  and  personal  property  as  shall  be  neces- 
sary  for  the  transaction  of  its  business. 

Sec.  23.  Any  company  organized  under  this  act  may  sue  and  be 
sued  in  any  court  of  law  or  equity,  with  the  same  rights  and  obligations 
;is  ji  natural  person,  and  in  addition  to  the  powers  hereinbefore  enumer- 
ated, shall  possess  and  exercise  all  such  rights  and  powers  as  are  neces- 
sarily  incidental  to  the  exercise  of  the  powers  expressly  granted  herein. 

Sec.  24.  This  act  shall  not  apply  to  contracts  made  between  persons, 
firms  or  corporations  of  this  state,  and  others  of  this  state  and  other 
st;it es  for  the  protection  of  their  own  property  under  the  plan  known 
ms  reciprocal  insurance  or  interinsurance,  nor  to  unincorporated  inter- 
indemnity  compacts. 


166  INSURANCE   LAWS   OP   CALIFORNIA. 

CHAPTER  399. 

An  act  relating  to  the  liability  of  employers  for  injuries  or  death  sustained  by 
their  employees,  providing  for  compensation  for  the  accidental  injury  of 
employees,  establishing  an  industrial  accident  board,  making  an  appropria- 
tion therefor,  defining  its  powers  and  providing  for  a  review  of  its  awards. 

[Stats.  1911,  p.  796.] 

7  he  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Abrogation  of  defenses. 

Section  1.  In  any  action  to  recover  damages  for  a  personal  injury 
sustained  within  this  state  by  an  employee  while  engaged  in  the  line  of 
his  duty  or  the  course  of  his  employment  as  such,  or  for  death  resulting 
from  personal  injury  so  sustained,  in  which  recovery  is  sought  upon  the 
ground  of  want  of  ordinary  or  reasonable  care  of  the  employer,  or  of 
any  officer,  agent  or  servant  of  the  employer,  the  fact  that  such  employee 
may  have  been  guilty  of  contributory  negligence  shall  not  bar  a  recovery 
therein  where  his  contributory  negligence  was  slight  and  that  of  the 
employer  was  gross,  in  comparison,  but  the  damages  may  be  diminished 
by  the  jury  in  proportion  to  the  amount  of  negligence  attributable  to 
such  employee,  and  it  shall  be  conclusively  presumed  that  such  employee 
was  not  guilty  of  contributory  negligence  in  any  case  where  the  viola- 
tion of  any  statute  enacted  for  the  safety  of  employees  contributed  to 
such  employee 's  injury ;  and  it  shall  not  be  a  defense : 

(1)  That  the  employee  either  expressly  or  impliedly  assumed  the  risk 
of  the  hazard  complained  of. 

(2)  That  the  injury  or  death  was  caused  in  whole  or  in  part  by  the 
want  of  ordinary  or  reasonable  care  of  a  fellow  servant. 

Sec.  2.  No  contract,  rule  or  regulation,  shall  exempt  the  employer 
from  any  of  the  provisions  of  the  preceding  section  of  this  act. 

Liability  for  compensation. 

Sec.  3.  Liability  for  the  compensation  hereinafter  provided  for,  in 
lieu  of  any  other  liability  whatsoever,  shall,  without  regard  to  negli- 
gence, exist  against  an  employer  for  any  personal  injury  accidentally 
sustained  by  his  employees,  and  for  his  death  if  the  injury  shall  approxi- 
mately cause  death,  in  those  cases  where  the  following  conditions  of 
compensation  concur: 

(1)  "Where,  at  the  time  of  the  accident,  both  the  employer  and  em- 
ployee are  subject  to  the  provisions  of  this  act  according  to  the  succeed- 
ing sections  hereof. 

(2)  Where,  at  the  time  of  the  accident,  the  employee  is  performing 
service  growing  out  of  and  incidental  to  his  employment  and  is  acting 
within  the  line  of  his  duty  or  course  of  his  employment  as  such. 

(3)  Where  the  injury  is  approximately  caused  by  accident,  either 
with  or  without  negligence,  and  is  not  so  caused  by  the  wilful  miscon- 
duct of  the  employee. 

And  where  such  conditions  of  compensation  exist  for  any  personal 
injury  or  death,  the  right  to  the  recovery  of  such  compensation  pursuant 
to  the  provisions  of  this  act,  and  acts  amendatory  thereof,  shall  be  the 
exclusive  remedy  against  the  employer  for  such  injury  or  death,  except 
that  when  the  injury  was  caused  by  the  personal  gross  negligence  or  wil- 
ful personal  misconduct  of  the  employer,  or  by  reason  of  his  violation 


LIABILITY    OF   EMPLOYERS.  167 

of  any  statute  designed  for  the  protection  of  employees  from  bodily 
injury,  the  employee  may,  at  his  option,  either  claim  compensation 
under  this  act,  or  maintain  an  action  for  damages  therefor ;  in  all  other 
cases  the  liability  of  the  employer  shall  be  the  same  as  if  this  and  the 
succeeding  sections  of  this  act  had  not  been  passed,  but  shall  be  subject 
to  the  provisions  of  the  preceding  sections  of  this  act. 

Sec.  4.  The  following  shall  constitute  employers  subject  to  the  pro- 
visions of  this  act  within  the  meaning  of  the  preceding  section : 

(1)  The  state,  and  each  county,  city  and  county,  city,  town,  village 
and  school  districts  and  all  public  corporations,  every  person,  firm,  and 
private  corporation  (including  any  public  service  corporation),  who  has 
any  person  in  service  under  any  contract  of  hire,  express  or  implied, 
oral  or  written,  and  who,  at  or  prior  to  the  time  of  the  accident  to  the 
employee  for  which  compensation  under  this  act  may  be  claimed,  shall, 
in  the  manner  provided  in  the  next  section,  have  elected  to  become  sub- 
ject to  the  provisions  of  this  act,  and  who  shall  not,  at  the  time  of  such 
accident,  have  withdrawn  such  election,  in  the  manner  provided  in  the 
next  section. 

The  State  of  California  is  not  an  employer  bound  by  the  provisions  of  the  "Em- 
ployers' Liability  Act,"  and  mandamus  will  not  lie  to  compel  the  industrial  accident 
board  to  hear  an  application  concerning  the  compensation  for  personal  injuries 
received  by  an  employee  of  the  state  in  the  course  of  his  duties  as  such  an  employee^ 

Where  a  statute  raises  a  doubt  as  to  whether  or  not  it  was  contemplated  by  its 
framers  that  the  state  should  be  subject  to  its  provisions,  the  construction  favors  the 
sovereign,  as  the  sovereign  is  not  brought  within  the  scope  of  its  own  laws  unless  the 
intent  that  ibis  should  be  done  is  plainly  made  to  appear. 

Statutes  permitting  the  state  to  be  sued  are  in  derogation  of  its  sovereignty  and 
will  be  strictlv  construed. 

By  the  terms  of  the  "Employers'  Liability  Act"  its  application  is,  generally  speak- 
ing, made  to  depend  upon  the  election  of  both  parties  to  the  contract  of  employment. 
In  the  absence  of  such  mutual  agreement  the  injured  employee  must  have  recourse  to 
his  claim  for  damages,  or  in  other  words  must  proceed  to  enforce  the  employer's  "lia- 
bility" as  distinguished  from  the  "comnensation"  which  might  be  due  under  the  act! 

The  sovereign  is  not  bound  at  all  to  compensate  an  individual  employee  for  injuries 
sustained  while  in  its  service,  and  no  right  of  recovery  in  favor  of  such  emplovee 
exists  except  by  statute.     (Miller  vs.  Pittslury,  44  C.  D.  589.) 

Sec.  5.  Such  election  on  the  part  of  the  employer  shall  be  made  by 
filing  with  the  industrial  accident  board,  hereinafter  provided  for  a 
written  statement  to  the  effect  that  he  accepts  the  provisions  of  this  act, 
the  filing  of  which  statement  shall  operate,  within  the  meaning  of  sec- 
tion three  of  this  act,  to  subject  such  employer  to  the  provisions  of  this 
act  and  all  acts  amendatory  thereof  for  the  term  of  one  year  from  the 
date  of  the  filing  of  such  statement,  and  thereafter,  without  further  act 
on  his  part,  for  successive  terms  of  one  year  each,  unless  such  employer 
shall,  at  least  sixty  days  prior  to  the  expiration  of  such  first  or  any  suc- 
ceeding year,  file  in  the  office  of  said  board  a  notice  in  writing  to  the 
effect  that  he  withdraws  his  election  to  be  subject  to  the  provisions  of  the 
act. 

Sec.  6.  The  term  "employee"  as  used  in  section  three  of  this  act 
shall  be  construed  to  mean : 

(1)  Every  person  in  the  service  of  the  state,  or  any  county,  city  and 
county,  city,  town,  village  or  school  district  therein,  and  all  public 
corporations,  under  any  appointment  or  contract  of  hire,  express  or 
implied,  oral  or  written,  except  any  official  of  the  state,  or  of  any  county, 
city  and  county,  city,  town,  village  or  school  district  therein  or  any 
public   corporation,    who  shall   have  been  elected  or  appointed  for  a 


168  INSURANCE   LAWS   OF   CALIFORNIA. 

regular  term  of  one  or  more  years,  or  to  complete  the  unexpired  portion 
of  any  such  regular  term. 

(2)  Every  person  in  the  service  of  another  under  any  contract  of 
hire,  express  or  implied,  oral  or  written,  including  aliens,  and  also 
including  minors  who  are  legally  permitted  to  work  under  the  laws  of 
the  state  (who,  for  the  purposes  of  the  next  section  of  this  act,  shall  be 
considered  the  same  and  shall  have  the  same  power  of  contracting  as 
adult  employees),  but  not  including  any  person  whose  employment  is 
but  casual  and  not  in  the  usual  course  of  the  trade,  business,  profession 
or  occupation  of  his  employer. 

Sec.  7.  Any  employee  as  denned  in  subsection  (1)  of  the  preceding 
section  shall  be  subject  to  the  provisions  of  this  act  and  of  any  act 
amendatory  thereof.  Any  employee  as  denned  in  subsection  (2)  of  the 
preceding  section  shall  be  deemed  to  have  accepted  and  shall,  within  the 
meaning  of  section  3  of  this  act  be  subject  to  the  provisions  of  this  act 
and  of  any  act  amendatory  thereof,  if,  at  the  time  of  the  accident  upon 
which  liability  is  claimed : 

(1)  The  employer  charged  with  such  liability  is  subject  to  the  provi- 
sions of  this  act,  whether  the  employee  has  actual  notice  thereof  or  not ; 
and 

(2)  At  the  time  of  entering  into  his  contract  of.  hire,  express  or 
implied,  with  such  employer,  such  employee  shall  not  have  given  to  his 
employer  notice  in  writing  that  he  elects  not  to  be  subject  to  the  provi- 
sions of  this  act,  or,  in  the  event  that  such  contract  of  hire  was  made  in 
advance  of  such  employer  becoming  subject  to  the  provisions  of  the 
act,  such  employee  shall,  without  giving  such  notice,  remain  in  the 
service  of  such  employer  for  thirty  days  after  the  employer  has  filed 
with  said  board  an  election  to  be  subject  to  the  terms  of  this  act. 

Scale  of  compensation. 

Sec.  8.  Where  liability  for  compensation  under  this  act  exists  the 
same  shall  be  as  provided  in  the  following  schedule: 

(1)  Such  medical  and  surgical  treatment,  medicines,  medical  and  sur- 
gical supplies,  crutches  and  apparatus,  as  may  be  reasonably  required 
at  the  time  of  the  injury  and  thereafter  during  the  disability,  but  not 
exceeding  ninety  days,  to  cure  and  relieve  from  the  effects  of  the  injury, 
the  same  to  be  provided  by  the  employer,  and  in  case  of  his  neglect  or 
refusal  seasonably  to  do  so,  the  employer  to  be  liable  for  the  reasonable 
expense  incurred  by  or  on  behalf  of  the  employee  in  providing  the  same ; 
provided,  however,  that  the  total  liability  under  this  subdivision  shall 
not  exceed  the  sum  of  $100.00. 

(2)  If  the  accident  causes  disability,  an  indemnity  which  shall  be 
payable  as  wages  on  the  eighth  day  after  the  injured  employee  leaves 
work  as  the  result  of  the  injury,  and  weekly  thereafter,  which  weekly 
indemnity  shall  be  as  follows : 

(a)  If  the  accident  causes  total  disability,  sixty-five  per  cent  of  the 
average  weekly  earnings  during  the  period  of  such  total  disability; 
provided,  that  if  the  disability  is  such  as  not  only  to  render  the  injured 
employee  entirely  incapable  of  work,  but  also  so  helpless  as  to  require 
the  assistance  of  a  nurse,  the  weekly  indemnity  during  the  period  of 
such  assistance  shall  be  increased  to  one  hundred  per  cent  of  the  average 
weekly  earnings. 


LIABILITY    OF   EMPLOYERS.  169 

(b)  If  the  accident  causes  partial  disability,  sixty-five  per  cent  of  the 
weekly  -loss  in  wages  during  the  period  of  such  partial  disability. 

(c)  If  the  disability  caused  by  the  accident  is  at  times  total  and  at 
times  partial,  the  weekly  indemnity  during  the  periods  of  each  such  total 
or  partial  disability  shall  be  in  accordance  with  said  subsections  (a)  and 
(&)  respectively. 

(d)  Said  subsections  (a),  (b)  and  (c)  shall  be  subject  to  the  follow- 
ing limitations : 

Aggregate  disability  indemnity  for  a  single  injury  shall  not  exceed 
three  times  the  average  annual  earnings  of  the  employee. 

If  the  period  of  disability  does  not  last  more  than  one  week  from  the 
day  the  employee  leaves  work  as  the  result  of  the  accident  no  indemnity 
whatever  shall  be  recoverable. 

If  the  period  of  disability  lasts  more  than  one  week  from  the  day  the 
employee  leaves  work  as  the  result  of  the  accident,  no  indemnity  shall 
be  recoverable  for  the  first  week  of  the  period  of  such  disability. 

The  aggregate  disability  period  shall  not,  in  any  event  extend  beyond 
fifteen  years  from  the  date  of  the  accident. 

(3)  The  death  of  the  injured  employee  shall  not  affect  the  obliga- 
tion of  the  employer  under  subsections  (1)  and  (2)  of  this  section,  so 
far  as  his  liability  shall  have  accrued  and  become  payable  at  the  time 
of  the  death,  but  the  death  shall  be  deemed  the  termination  of  disability, 
and  the  employer  shall  thereupon  be  liable  for  the  following  death 
benefits  in  lieu  of  any  further  disability  benefits,  provided  that  such 
death  was  approximately  caused  by  the  accident  causing  such  disability: 

(a)  In  case  the  deceased  employee  leaves  a  person  or  persons  wholly 
dependent  upon  him  for  support,  the  death  benefit  shall  be  a  sum  suffi- 
cient when  added  to  the  benefits  which  shall,  at  the  time  of  death,  have 
accrued  and  become  payable  under  the  provisions  of  subsection  (2)  of 
this  section  to  make  the  total  compensation  for  the  injury  and  death, 
exclusive  of  the  benefit  provided  for  in  subsection  (1),  equal  to  three 
times  his  annual  average  earnings,  not  less  than  $1,000  nor  more  than 
$5,000,  the  same  to  be  payable,  unless  and  until  the  industrial  accident 
board  shall  otherwise  direct,  in  weekly  installments  corresponding  in 
amount  to  the  weekly  earnings  of  the  employee. 

(6)  In  case  the  deceased  employee  leaves  no  one  wholly  dependent  on 
him  for  support,  but  one  or  more  persons  partially  dependent  therefor, 
the  death  benefit  shall  be  such  percentage  of  three  times  such  average 
annual  earnings  of  the  employee  as  the  annual  amount  devoted  by  the 
deceased  to  the  support  of  the  person  or  persons  so  partially  dependent 
upon  him  for  support  bears  to  such  average  earnings,  the  same  to  be 
payable,  unless  and  until  the  industrial  accident  board  shall  otherwise 
direct,  in  weekly  installments  corresponding  to  the  weekly  earnings  of 
the  employee ;  provided,  that  the  total  compensation  for  the  injury  and 
death,  exclusive  of  the  benefit  provided  for  in  said  subsection  (1),  shall 
not  exceed  three  times  such  average  annual  earnings. 

(c)  In  the  event  that  the  accident  shall  have  approximately  caused 
permanent  disability,  either  total  or  partial,  and  the  employee  shall  die 
within  fifteen  years  after  the  date  of  the  accident,  liability  for  the 
death  benefits  provided  for  in  said  subsections  (a)  and  (b)  respectively 
shall  exist  only  where  the  accident  was  the  approximate  cause  of  death 
within  said  period  of  fifteen  years. 


170  INSURANCE   LAWS   OP   CALIFORNIA. 

(d)  If  the  deceased  employee  leaves  no  person  dependent  upon  him 
for  support,  and  the  accident  approximately  causes  death,  the  death 
benefit  shall  consist  of  the  reasonable  expenses  of  his  burial  not  exceed- 
ing $100. 

Method  of  computation. 

Sec.  9.  (1)  The  weekly  earning  referred  to  in  section  (8)  shall  be 
one  fifty-second  of  the  average  annual  earnings  of  the  employee;  aver- 
age annual  earnings  shall  not  be  taken  at  less  than  $333.33,  nor  more 
than  $1,666.66,  and  between  said  limits  shall  be  arrived  at  as  follows: 

(a)  If  the  injured  employee  has  worked  in  such  employment,  whether 
for  the  same  employer  or  not,  during  substantially  the  whole  of  the  year 
immediately  preceding  his  injury,  his  average  annual  earnings  shall 
consist  of  three  hundred  times  the  average  daily  wage  or  salary  which  he 
has  earned  as  such  employee  during  the  days  when  so  employed. 

(6)  If  the  injured  employee  has  not  so  worked  in  such  employment 
during  substantially  the  whole  of  such  immediately  preceding  year,  his 
average  annual  earnings  shall  consist  of  three  hundred  times  the  average 
daily  wage  or  salary  which  an  employee  of  the  same  class  working  sub- 
stantially the  whole  of  such  immediately  preceding  year  in  the  same  or 
a  similar  employment  in  the  same  or  a  neighboring  place  shall  have 
earned  during  the  days  when  so  employed. 

(c)  In  cases  where  the  foregoing  methods  of  arriving  at  the  average 
annual  earnings  of  the  injured  employee  can  not  reasonably  and  fairly 
be  applied,  such  annual  earnings  shall  be  taken  at  such  sum  as  having 
regard  to  the  previous  earnings  of  the  injured  employee,  and  of  other 
employees  of  the  same  or  most  similar  class,  working  in  the  same  or  most 
similar  employment  in  the  same  or  neighboring  locality,  shall  reasonably 
represent  the  average  earning  capacity  of  the  injured  employee  at  the 
time  of  the  injury  in  the  employment  in  which  he  was  working  at  such 
time. 

(d)  The  fact  that  an  employee  has  suffered  a  previous  disability,  or 
received  compensation  therefor,  shall  not  preclude  him  from  compensa- 
tion for  a  later  injury,  or  for  death  resulting  therefrom,  but  in  deter- 
mining compensation  for  the  later  injury,  or  death  resulting  therefrom, 
his  average  annual  earnings  shall  be  such  sum  as  will  reasonably  repre- 
sent his  annual  earning  capacity  at  the  time  of  the  later  injury,  and 
shall  be  arrived  at  according  to  the  previous  provisions  of  this  section. 

(2)  The  weekly  loss  in  wages  referred  to  in  section  8,  shall  consist  of 
the  difference  between  the  average  weekly  earnings  of  the  injured 
employee,  computed  according  to  the  provisions  of  this  section,  and  the 
weekly  amount  which  the  injured  employee,  in  the  exercise  of  reasonable 
diligence,  will  probably  be  able  to  earn,  the  same  to  be  fixed  as  of  the 
time  of  the  accident,  but  to  be  determined  in  view  of  the  nature  and 
extent  of  the  injury. 

(3)  The  following  shall  be  conclusively  presumed  to  be  solely  and 
wholly  dependent  for  support  upon  a  deceased  employee : 

(a)  A  wife  upon  a  husband. 

(b)  A  husband  upon  a  wife  upon  whose  earnings  he  is  partially  or 
wholly  dependent  at  the  time  of  her  death. 

(c)  A  child  or  children  under  the  age  of  eighteen  years  (or  over  said 
age,  but  physically  or  mentally  incapacitated  from  earning),  upon  the 


LIABILITY    OF   EMPLOYERS.  171 

parent  with  whom  he  or  they  are  living  at  the  time  of  the  death  of  such 
parent,  there  being  no  surviving  dependent  parent.  In  case  there  is 
more  than  one  child  thus  dependent,  the  death  benefit  shall  be  divided 
equally  among  them.  In  all  other  cases  questions  of  entire  or  partial 
dependency  shall  be  determined  in  accordance  with  the  fact,  as  the  fact 
may  be  at  the  time  of  the  death  of  the  employee,  and  in  such  other 
cases  if  there  is  more  than  one  person  wholly  dependent,  the  death  bene- 
fit shall  be  divided  equally  among  them  and  persons  partially  dependent, 
if  any,  shall  receive  no  part  thereof,  and  if  there  is  more  than  one  per- 
son partially  dependent,  the  death  benefit  shall  be  divided  among  them 
according  to  the  relative  extent  of  their  dependency. 

(4)  Questions  as  to  who  constitute  dependents  and  the  extent  of  their 
dependency  shall  be  determined  as  of  the  date  of  the  death  of  the 
employee,  and  their  right  to  any  death  benefit  shall  become  fixed  as  of 
such  time,  irrespective  of  any  subsequent  change  in  conditions,  and  the 
death  benefit  shall  be  directly  recoverable  by  and  payable  to  the  depend- 
ent or  dependents  entitled  thereto  or  their  legal  guardians  or  trustees. 

Notice  of  injury. 

Si;c.  10.  No  claim  to  recover  compensation  under  this  act  shall  be 
maintained  unless  within  thirty  days  after  the  occurrence  of  the  acci- 
dent which  is  claimed  to  have  caused  the  injury  or  death,  notice  in 
writing,  stating  the  name  and  the  address  of  the  person  injured,  the 
time  and  the  place  where  the  accident  occurred,  and  the  nature  of  the 
injury,  and  signed  by  the  person  injured,  or  some  one  in  his  behalf,  or 
in  case  of  his  death,  by  a  dependent  or  some  one  of  his  behalf,  shall  be 
served  upon  the  employer  by  delivering  to  and  leaving  with  him  a  copy 
of  such  notice  or  by  mailing  to  him  by  registered  mail  a  copy  thereof 
in  a  sealed  and  posted  envelope  addressed  to  him  at  his  last  known  place 
of  business  or  residence.  Such  mailing  shall  constitute  complete  service. 
Provided,  however,  that  any  payment  of  compensation  under  this  act, 
in  whole  or  in  part,  made  by  the  employer  before  the  expiration  of  said 
thirty  days  shaD  be  equivalent  to  the  notice  herein  required;  and  pro- 
vided further,  thai  the  failure  to  give  any  such  notice,  or  any  defect  or 
inaccuracy  therein,  shall  not  be  a  bar  to  recovery  under  this  act  if  it  is 
found  as  a  fact  in  the  proceedings  for  collections  of  the  claim  that  there 
was  no  intention  to  mislead  the  employer,  and  that  he  was  not  in  fact 
misled  thereby;  and  provided  further,  that  if  no  such  notice  is  given 
and  no  payment  of  compensation  made,  within  one  year  from  the  date  of 
the  accident,  the  right  to  compensation  therefor  shall  be  wholly  barred. 

Examination  by  physician. 

Sec.  11.  Wherever  in  case  of  injury  the  right  to  compensation  under 
this  act  would  exist  in  favor  of  any  employee,  he  shall,  upon  the  written 
request  of  his  employer,  submit  from  time  to  time  to  examination  by  a 
regular  practicing  physician,  who  shall  be  provided  and  paid  for  by  the 
employer,  and  shall  likewise  submit  to  examination  from  time  to  time 
by  any  regular  physician  selected  by  said  industrial  accident  board,  or 
any  member  or  examiner  thereof.  The  employee  shall  be  entitled  to 
have  a  physician  provided  and  paid  for  by  himself  present  at  any  such 
examination.  So  long  as  the  employee,  after  such  written  request  of 
the  employer,  shall  refuse  to  submit  to  such  examination,  or  shall  in  any 
way  obstruct  the  same,  his  right  to  begin  or  maintain  any  proceeding 


172  INSURANCE   LAWS   OP   CALIFORNIA. 

for  the  collection  of  compensation  shall  be  suspended,  and  if  he  shall 
refuse  to  submit  to  such  examination  after  direction  by  the  board,  or 
any  member  or  examiner  thereof,  or  shall  in  any  way  obstruct  the  same, 
his  right  to  the  weekly  indemnity  which  shall  accrue  and  become  pay- 
able during  the  period  of  such  refusal  or  obstruction,  shall  be  barred. 
Any  physician  who  shall  make  or  be  present  at  any  such  examination 
may  be  required  to  testify  as  to  the  results  thereof. 

Industrial  accident  board. 

Sec.  12.  Any  dispute  or  controversy  concerning  compensation  under 
this  act,  including  any  in  which  the  state  may  be  a  party,  shall  be  sub- 
mitted to  a  board  consisting  of  three  members,  which  shall  be  known  as 
the  industrial  accident  board.  Within  thirty  days  before  this  act  shall 
take  effect,  the  governor,  by  and  with  the  advice  and  consent  of  the 
senate,  shall  appoint  a  member  who  shall  serve  two  years,  and  another 
who  shall  serve  three  years,  and  another  who  shall  serve  four  years. 
Thereafter  such  three  members  shall  be  appointed  and  confirmed  for 
terms  of  four  years  each.  Vacancies  shall  be  filled  in  the  same  manner 
for  the  unexpired  term.  Each  member  of  the  board,  before  entering 
upon  the  duties  of  his  office,  shall  take  the  oath  prescribed  by  the  con- 
stitution. A  majority  of  the  board  shall  constitute  a  quorum  for  the 
exercise  of  any  of  the  powers  or  authority  conferred  by  this  act,  and  an 
award  by  a  majority  shall  be  valid.  In  case  of  a  vacancy,  the  remaining 
two  members  of  the  board  shall  exercise  all  the  powers  and  authority 
of  the  board  until  such  vacancy  is  filled.  Each  member  of  the  board 
shall  receive  an  annual  salary  of  three  thousand  six  hundred  dollars. 

Sec.  13.  The  board  shall  organize  by  choosing  one  of  its  members 
as  chairman.  Subject  to  the  provisions  of  this  act,  it  may  adopt  its 
own  rules  of  procedure  and  may  change  the  same  from  time  to  time  in 
its  discretion.  The  board,  when  it  shall  deem  it  necessary  to  expedite 
its  business,  may  from  time  to  time  employ  one  or  more  expert  exam- 
iners for  such  length  of  time  as  may  be  required.  It  may  also  appoint 
a  secretary  and  such  clerical  help  as  it  may  deem  necessary.  It  shall 
fix  the  compensation  of  all  assistants  so  appointed. 

Sec.  14.  The  board  shall  keep  its  office  at  the  city  of  San  Francisco, 
and  shall  be  provided  by  the  secretary  of  state  with  a  suitable  room  or 
rooms,  necessary  office  furniture,  stationery,  and  other  supplies.  The 
members  of  the  board  and  its  assistants,  shall  be  entitled  to  receive  from 
the  state  their  actual  and  necessary  expenses  while  traveling  on  the 
business  of  the  board,  but  such  expenses  shall  be  sworn  to  by  the  person 
who  incurred  the  same,  and  be  approved  by  the  chairman  of  the  board, 
before  payment  is  made.  All  salaries  and  expenses  authorized  by  this 
act  shall  be  audited  and  paid  out  of  the  general  funds  of  the  state  the 
same  as  other  general  state  expenses  are  audited  and  paid. 

Notice  of  hearing. 

Sec.  15.  Upon  the  filing  with  the  board  by  any  party  in  interest  of 
an  application  in  writing  stating  the  general  nature  of  any  dispute  or 
controversy  concerning  compensation  under  this  act,  it  shall  fix  a  time 
for  the  hearing  thereof,  which  shall  not  be  more  than  forty  days  after 
the  filing  of  such  application.  The  board  shall  cause  notice  of  such 
hearing  to  be  given  to  each  party  interested  by  service  of  such  notice  on 


LIABILITY   OP   EMPLOYERS.  173 

him  personally  or  by  mailing  a  copy  thereof  to  him  at  his  last  known 
post-office  address  at  least  ten  days  before  such  hearing.  Such  hearing- 
may  be  adjourned  from  time  to  time  in  the  discretion  of  the  board,  and 
hearings  shall  be  held  at  such  places  as  the  board  shall  designate. 
Either  party  shall  have  the  right  to  be  present  at  any  hearing,  in  per- 
son or  by  attorney  or  any  other  agent,  and  to  present  such  testimony 
as  shall  be  pertinent  to  the  controversy  before  the  board,  but  the  board 
may.  with  or  without  notice  to  either  party,  cause  testimony  to  be  taken, 
or  inspection  of  the  premises  where  the  injury  occurred  to  be  had,  or 
the  time  books  ami  pay  roll  of  the  employer  to  be  examined  by  any  mem- 
ber of  the  board  or  any  examiner  appointed  by  it,  and  may  from  time 
to  time,  direct  any  employee  claiming  compensation  to  be  examined  by 
a  regular  physician;  the  testimony  so  taken  and  the  results  of  any  such 
inspection  or  examination,  to  be  reported  to  the  board  for  its  considera- 
tion upon  final  hearing.  The  board,  or  any  member  thereof,  or  any 
examiner  appointed  thereby  shall  have  power  and  authority  to  issue 
subpomas  in  compel  the  attendance  of  witnesses  or  parties,  and  the  pro- 
duction of  books,  papers,  or  records,  and  to  administer  oaths.  Obedience 
to  such  subpoenas  shall  be  enforced  by  the  superior  court  of  any  county, 
or  city  and  county. 

Skc.  16.  After  final  hearing  by  said  board,  it  shall  make  and  file 
(1)  its  findings  upon  all  facts  involved  in  the  controversy,  and  (2)  its 
.'ward,  which  shall  state  its  determination  as  to  the  rights  of  the  party. 

Skc.  17.  Either  party  may  present  a  certified  copy  of  the  award  to 
the  superior  court  for  any  county  or  city  and  county,  whereupon  said 
court  shall,  without  notice,  render  a  judgment  in  accordance  therewith, 
which  judgment,  until  and  unless  set  aside  as  hereinafter  provided, 
shall  have  the  same  effect  as  though  duly  rendered  in  an  action  duly 
tried  and  determined  by  said  court,  and  shall,  with  the  like  effect,  be 
entered  and  docketed. 

Review  by  court. 

Skc.  18.  The  findings  of  fact  made  by  the  board  acting  within  its 
powers,  shall,  in  the  absence  of  fraud,  be  conclusive,  and  the  award, 
whether  judgment  has  been  rendered  thereon  or  not,  shall  be  subject  to 
review  only  in  the  manner  and  upon  the  grounds  following:  within 
thirty  days  from  the  date  of  the  award,  any  party  aggrieved  thereby 
may  file  with  the  board  an  application  in  writing  for  a  review  of  such 
award,  stating  generally  the  grounds  upon  which  such  review  is  sought; 
within  thirty  days  thereafter  the  board  shall  cause  all  documents  and 
papers  on  file  in  the  matter,  and  a  transcript  of  all  testimony  which 
may  have  been  taken  therein,  to  be  transmitted  with  their  findings  and 
award  to  the  clerk  of  the  superior  court  of  that  county  or  city  and 
county  wherein  the  accident  occurred;  such  application  for  a  review 
may  thereupon  be  brought  on  for  hearing  before  said  court  upon  such 
record  by  either  party  on  ten  days'  notice  to  the  other,  subject,  how- 
ever, to  the  provisions  of  law  for  a  change  of  the  place  of  trial  or  the 
calling  of  another  judge.  Upon  such  hearing  the  court  may  confirm 
or  set  aside  such  award,  and  any  judgment  which  may  theretofore  have 


174  INSURANCE   LAWS   OP   CALIFORNIA. 

been  rendered  thereon,  but  the  same  shall  be  set  aside  only  upon  the 
following  grounds: 

(1)  That  the  board  acted  without  or  in  excess  of  its  powers. 

(2)  That  the  award  was  procured  by  fraud. 

(3)  That  the  findings  of  fact  by  the  board  do  not  support  the  award. 

Remanding  of  record. 

Sec.  19.  Upon  the  setting  aside  of  any  award  the  court  may  recom- 
mit the  controversy  and  remand  the  record  in  the  case  to  the  board,  for 
further  hearing  or  proceedings,  or  it  may  enter  the  proper  judgment 
upon  the  findings,  as  the  nature  of  the  case  shall  demand.  An  abstract 
of  the  judgment  entered  by  the  trial  court  upon  the  review  of  any  award 
shall  be  made  by  the  clerk  thereof  upon  the  docket  entry  of  any  judg- 
ment which  may  theretofore  have  been  rendered  upon  such  award,  and 
transcripts  of  such  abstract  may  thereupon  be  obtained  for  like  entry 
upon  the  dockets  of  the  courts  of  other  counties,  or  city  and  county. 

Sec.  20.  Any  party  aggrieved  by  a  judgment  entered  upon  the 
review  of  any  award,  may  appeal  therefrom  within  the  time  and  in  the 
manner  provided  for  an  appeal  from  the  orders  of  the  superior  court ; 
but  all  such  appeals  shall  be  placed  on  the  calendar  of  the  supreme 
court  and  brought  to  a  hearing  in  the  same  manner  as  criminal  causes 
on  such  calendar. 

Sec.  21.  No  fees  shall  be  charged  by  the  clerk  of  any  court  for  the 
performance  of  any  official  service  required  by  this  act,  except  for  the 
docketing  of  judgments  and  for  certified  copies  or  transcripts  thereof. 
In  proceedings  to  review  an  award,  costs  as  between  the  parties  shall  be 
allowed  or  not  in  the  discretion  of  the  court. 

Sec.  22.  No  claim  for  compensation  under  this  act  shall  be  assign- 
able before  payment,  but  this  provision  shall  not  affect  the  survival 
thereof ;  nor  shall  any  claim  for  compensation,  or  compensation  award, 
adjudged  or  paid,  be  subject  to  be  taken  for  the  debts  of  the  party 
entitled  thereto. 

Sec.  23.  A  claim  for  compensation  for  the  injury  or  death  of  any 
employee,  or  any  award  or  judgment  entered  thereon,  shall  be  entitled 
to  a  preference  over  the  other  debts  of  the  employer  if  and  to  the  same 
extent  as  the  wages  of  such  employee  shall  be  so  preferred;  but  this 
section  shall  not  impair  the  lien  of  any  judgment  entered  upon  any 
award. 

Insurance  provisions. 

Sec.  24.  Nothing  in  this  act  shall  affect  the  organization  of  any 
mutual  or  other  insurance  company,  or  any  existing  contract  for  insur- 
ance or  employers'  liability,  nor  the  right  of  the  employer  to  insure  in 
mutual  or  other  companies,  in  whole  or  in  part,  against  such  liability,  or 
against  the  liability  for  the  compensation  provided  for  by  this  act,  or  to 
provide  by  mutual  or  other  insurance,  or  by  arrangement  with  his 
employees,  or  otherwise,  for  the  payment  to  such  employees,  their  fami- 
lies, dependents,  or  representatives,  of  sick,  accident  or  death  benefits, 
in  addition  to  the  compensation  provided  for  by  this  act.  But  liability 
for  compensation  under  this  act  shall  not  be  reduced  or  affected  by  any 
insurance,  contributions,  or  other  benefit  whatsoever  due  to  or  received 


LIABILITY   OP   EMPLOYERS.  175 

by  the  person  entitled  to  such  compensation,  and  the  person  so  entitled 
shall,  irrespective  of  any  insurance  or  other  contract,  have  the  right  to 
recover  the  same  directly  from  the  employer,  and  in  addition  thereto, 
the  right  to  enforce  in  his  own  name,  in  the  manner  provided  in  this 
act,  the  liability  of  any  insurance  company,  which  may,  in  whole  or  in 
part  have  insured  the  liability  for  such  compensation;  provided,  how- 
ever, that  payment  in  whole  or  in  part  of  such  compensation  by  either 
the  employer  or  the  insurance  company,  shall,  to  the  extent  thereof,  be 
a  bar  to  recovery  against  the  other  of  the  amount  so  paid ;  and  provided 
further,  that  as  between  the  employer  and  the  insurance  company,  pay- 
ment by  either  directly  to  the  employee,  or  to  the  person  entitled  to 
compensation,  shall  be  subject  to  the  conditions  of  the  insurance  con- 
tract between  them. 

Sec.  25.  Every  contract  for  the  insurance  of  the  compensation 
herein  provided  for,  or  against  liability  therefor,  shall  be  deemed  to  be 
made  subject  to  the  provisions  of  this  act,  and  provisions  thereof  incon- 
sistent with  this  act  shall  be  void.  No  company  shall  enter  into  any 
such  contract  of  insurance  unless  such  company  shall  have  been  approved 
by  the  commissioner  of  insurance,  as  provided  by  law. 

Sec.  26.  The  making  of  a  lawful  claim  against  an  employer  for 
compensation  under  this  act  for  the  injury  or  death  of  his  employee 
shall  operate  as  an  assignment  of  any  assignable  cause  of  action  in  tort 
which  the  employee  or  his  personal  representative  may  have  against  any 
other  party  for  such  injury  or  death,  and  such  employer  may  enforce 
in  his  own  name  the  liability  of  such  other  party. 

Posting  of  notices. 

Sec.  27.  The  board  shall  cause  to  be  printed  and  furnished  free  of 
charge  to  any  employer  or  employee  such  blank  forms  as  it  shall  deem 
requisite  to  facilitate  or  promote  the  efficient  administration  of  this  act; 
it  shall  provide  a  proper  record  book  in  which  shall  be  entered  and 
indexed  the  name  of  every  employer  who  shall  file  a  statement  of  elec- 
tion under  this  act,  and  the  date  of  the  filing  thereof,  and  a  separate 
book  in  which  shall  be  entered  and  indexed  the  name  of  every  employer 
who  shall  file  his  withdrawal  of  such  election,  and  the  date  of  the  filing 
thereof;  and  a  book  in  which  shall  be  recorded  all  awards  made  by  the 
board ;  and  such  other  books  or  records  as  it  shall  deem  required  by  the 
proper  and  efficient  administration  of  this  act;  all  such  records  to  be 
kept  in  the  office  of  the  board.  Upon  the  filing  of  a  statement  of  elec- 
tion by  an  employer  to  become  subject  to  the  provisions  of  this  act,  the 
board  shall  forthwith  cause  notice  of  the  fact  to  be  given  to  his 
employees,  by  posting  and  keeping  continuously  posted  in  a  public  and 
conspicuous  place  such  notice  thereof  in  the  office,  shop,  or  place  of 
business  of  the  employer,  or  by  publishing,  or  in  such  other  manner  as 
the  board  shall  deem  most  effective,  and  the  board  shall  cause  notice  to 
be  given  in  like  manner  of  the  filing  of  any  withdrawal  of  such  election ; 
but  notwithstanding  the  failure  to  give,  or  the  insufficiency  of,  any  such 
notice,  knowledge  of  all  filed  statements  of  election  and  withdrawals  of 
election,  and  of  the  time  of  the  filing  of  the  same,  shall  conclusively  be 
imputed  to  all  employees. 


176  INSURANCE   LAWS   OP   CALIFORNIA. 

Sec.  28.  Nothing  in  this  act  contained  shall  be  construed  as  impair- 
ing the  right  of  parties  interested,  after  the  injury  or  death  of  an  em- 
ployee, to  compromise  and  settle  upon  such  terms  as  they  may  agree 
upon,  any  liability  which  may  be  claimed  to  exist  under  this  act  on 
account  of  such  injury  or  death,  nor  as  conferring  upon  the  dependents 
of  any  injured  employee  any  interest  which  he  may  not  divert  by  such 
settlement  or  for  which  he  or  his  estate  shall,  in  the  event  of  such  set- 
tlement by  him,  be  accountable  to  such  dependents  or  any  of  them. 

Sec.  29.  The  sum  of  fifty  thousand  dollars  is  hereby  appropriated 
out  of  any  moneys  in  the  state  treasury,  not  otherwise  appropriated,  to 
be  used  by  the  industrial  accident  board  in  carrying  out  the  purposes  of 
this  act,  and  the  controller  is  hereby  directed  to  draw  his  warrant  on  the 
general  fund  from  time  to  time  in  favor  of  said  industrial  accident 
board  for  the  amounts  expended  under  its  direction,  and  the  treasurer 
is  hereby  authorized  and  directed  to  pay  the  same. 

Sec.  30.  All  acts  or  parts  of  acts  inconsistent  with  this  act  are 
hereby  repealed. 

Sec.  31.  This  act  shall  take  effect  and  be  in  force  on  and  after  the 
first  day  of  September,  A.  D.  1911. 


COMPENSATION,   INSURANCE   AND   SAFETY   ACT.  177 

WORKMEN'S  COMPENSATION,  INSURANCE  AND  SAFETY  ACT. 

CHAPTER  176. 

An  act  to  promote  the  general  welfare  of  the  people  of  this  state  as  affected 
by  accident  causing  the  injury  or  death  of  employees  in  the  course  of  their 
employment,  by  creating  a  liability  on  the  part  of  employers  to  compensate 
such  employees  and  their  dependents  for  such  accidental  injury  or  death 
irrespective  of  the  fault  of  either  party,  and  providing  the  means  and 
methods  of  enforcing  such  liability;  and  creating  a  "state  compensation 
insurance  fund"  to  insure  employers  against  such  liability  and  providing  for 
its  administration  and  regulating  such  insurance  by  other  insurance  carriers; 
and  requiring  safety  in  all  employments  and  places  of  employment  in  this 
state  and  providing  the  means  and  methods  of  enforcing  such  safety;  and 
requiring  reports  of  industrial  accidents;  and  providing  penalties  for 
offenses  by  employers,  their  officers,  agents,  and  by  employees  and  other 
persons  and  corporations;  and  creating  an  industrial  accident  commission, 
providing  for  its  organization,  defining  its  powers  and  duties  and  providing 
for  a  review  of  its  orders,  decisions  and  awards;  and  appropriating  moneys 
to  carry  out  the  provisions  of  this  act;  and  repealing  all  acts  and  parts  of 
acts  inconsistent  with  the  provisions  of  this  act. 

[Approved  May  26,  1913;  Stats.  1913,  p.  279.] 

The  people  of  the  State  of  California  do  enact  as  follows: 

Section  1.  This  act  shall  be  known,  and  may  be  cited,  as  short 
the  "workmen's  compensation,  insurance  and  safety  act"  andtlte* 
shall  apply  to  the  subjects  mentioned  in  its  title. 

Sec.  2.     The  following  terms  as  used  in  this  act  shall,  unless  Terms 
a  different  meaning  is  plainly  required  by  the  context,  be  con- 
strued as  follows : 

(1)  The  term  "commission"  means  the  industrial  accident  "Oommis- 
commission  of  the  State  of  California. 

(2)  The  term  "commissioner"  means  one  of  the  members  of  "Oommia- 

.«  •     .  sioner. 

the  commission. 

(3)  The  term  "compensation"  means  compensation  under  "Compen- 
this  act  and  includes  every  benefit  or  payment  conferred  by  sat  on" 
sections  twelve  to  thirty-six,   inclusive,   of  this  act  upon  an 
injured   employee,   or  in  the   event  of  his   death,   upon   his 
dependents,  without  regard  to  negligence. 

(4)  The  term  "damages"  means  the  recovery  allowed  in  an  "i>am; 
action  at  law  as  contrasted  with  compensation  under  this  act.  &i 

(5)  The  term  "person"  includes  an  individual,  firm,  volun-  "Person." 
tary  association  or  a  corporation. 

(6)  The  term  "insurance  carrier"  includes  the  state  com-  "insurance 
pensation  insurance  fund  herein  created  and  any  private  com- c 
pany,  corporation  or  mutual  association  authorized  under  the 

laws  of  this  state  to  insure  employers  against  liability  for  com- 
pensation under  this  act. 

(7)  The    phrase    "compensation    provisions    of    this    act"  s'S?onPpro- 
means  and  includes  sections  twelve  to  thirty-five,  inclusive,  of  visions." 
this  act. 

12— IL 


178 


INSURANCE   LAWS   OF    CALIFORNIA. 


"Safety 
provi- 
sions." 


(8)  The  phrase  "safety  provisions  of  this  act"  means  and 
includes  sections  fifty-one  to  seventy-two,  inclusive,  of  this  act. 

(9)  Whenever  in  this  act  the  singular  is  used  the  plural 
shall  be  included;  where  the  masculine  gender  is  used  the 
feminine  and  neuter  shall  be  included. 


Industrial 
Accident 
Commis- 
sion 
created. 


Members. 


Term. 


Salary. 


Organiza- 
tion of 
commis- 
sion. 


Delegation 
of  power. 


Seal. 


Offices. 


Industrial   Accident   Commission. 

Sec.  3.  There  is  hereby  created  a  board  to  consist  of  three 
members  who  shall  be  appointed  by  the  governor  from  the 
state  at  large  and  which  shall  be  known  as  the  "industrial 
accident  commission"  and  shall  have  the  powers,  duties  and 
functions  hereinafter  conferred.  Within  thirty  days  prior 
to  the  first  day  of  January,  1914,  the  governor  shall  appoint 
the  three  members  of  said  commission,  one  for  the  term  of  two 
3ears,  one  for  the  term  of  three  years  and  one  for  the  term 
of  four  years.  Thereafter,  the  term  of  office  of  each  com- 
missioner shall  be  four  years.  Vacancies  shall  be  filled  by 
appointment  in  the  same  manner  for  the  unexpired  term. 
Each  commissioner  shall  receive  an  annual  salary  of  five 
thousand  dollars.  Each  commissioner  shall,  before  entering 
upon  the  duties  of  his  office,  take  and  subscribe  the  constitu- 
tional oath  of  office. 

Sec.  4.  The  commission  shall  organize  by  choosing  one  of 
its  members  as  chairman.  A  majority  of  the  commission  shall 
constitute  a  quorum  for  the  transaction  of  any  business,  for 
the  performance  of  any  duty,  or  for  the  exercise  of  any  power 
or  authority  of  the  commission.  A  vacancy  on  the  commis- 
sion shall  not  impair  the  right  of  the  remaining  members  to 
perform  all  the  duties  and  exercise  all  the  power  and  authority 
of  the  commission.  The  act  of  the  majority  of  the  commission, 
when  in  session  as  a  commission,  shall  be  deemed  to  be  the  act 
of  the  commission,  but  any  investigation,  inquiry  or  hearing, 
which  the  commission  has  power  to  undertake  or  to  hold,  may 
be  undertaken  or  held  by  or  before  any  member  thereof  or  any 
referee  appointed  by  the  commission  for  that  purpose,  and 
every  finding,  order,  decision,  or  award  made  by  any  com- 
missioner or  referee,  pursuant  to  such  investigation,  inquiry 
or  hearing,  when  approved  and  confirmed  by  the  commission 
and  ordered  filed  in  its  office,  shall  be  deemed  to  be  the  finding, 
order,  decision  or  award  of  the  commission. 

Sec.  5.  The  commission  shall  have  a  seal,  bearing  the  fol- 
lowing inscription :  ' '  Industrial  Accident  Commission  State  of 
California,  seal."  The  seal  shall  be  affixed  to  all  writs  and 
authentications  of  copies  of  records  and  to  such  other  instru- 
ments as  the  commission  shall  direct.  All  courts  shall  take 
judicial  notice  of  said  seal. 

Sec.  6.  The  commission  shall  keep  its  principal  office  in  the 
city  and  county  of  San  Francisco,  and  shall  also  keep  an  office 
in  the  city  of  Los  Angeles,  and  shall  provide  itself  with  suit- 
able rooms,  necessary  office  furniture,  stationery  and  other 
supplies.  For  the  purpose  of  holding  sessions  in  other  places, 
the  commission  shall  have  power  to  rent  temporary  quarters. 


COMPENSATION,   INSURANCE  AND   SAFETY   ACT.  179 

Sec  7.     The   commission   shall   have   full   power   and  au- 
thority : 

(1)  To  appoint  as  its  attorney  an  attorney-at-law  of  this  Attorney, 
state,  who  shall  hold  office  at  the  pleasure  of  the  commission. 
It  shall  be  the  right  and  the  duty  of  the  attorney  to  represent 
and  appear  for  the  people  of  the  State  of  California  and  the 
commission  in  all  actions  and  proceedings  involving  any  ques- 
tion under  this  act  or  under  any  order  or  act  of  the  commis- 
sion and,  if  directed  so  to  do  by  the  commission,  to  intervene, 
if  possible,  in  any  action  or  proceeding  in  which  any  such 
question  is  involved;  to  commence,  prosecute  and  expedite  the 
final  determination  of  all  actions  or  proceedings,  civil  or 
criminal,  directed  or  authorized  by  the  commission;  to  advise 
the  commission  and  each  member  thereof,  when  so  requested, 
in  regard  to  all  matters  in  connection  with  the  jurisdiction, 
powers  or  duties  of  the  commission  and  members  thereof;  and 
generally  to  perform  all  duties  and  services  as  attorney  to  the 
commission  which  may  be  required  of  him. 

(2)*  To  appoint,  and  it  shall  appoint,  a  secretary,  who  shall  Secretary, 
hold  office  at  the  pleasure  of  the  commission.  It  shall  be  the 
duty  of  the  secretary  to  keep  a  full  and  true  record  of  all  the 
proceedings  of  the  commission,  to  issue  all  necessary  processes, 
writs,  warrants  and  notices  which  the  commission  is  required 
or  authorized  to  issue,  and  generally  to  perform  such  other 
duties  as  the  commission  may  prescribe.  The  commission  may 
also  appoint  such  assistant  secretaries  as  may  be  necessary  and 
such  assistant  secretaries  may  perform  any  duty  of  the  secre- 
tary, when  so  directed  by  the  commission. 

(3)  To  appoint  a  manager  of  the  state  compensation  insur-  ^fasntater 
iuice  fund  who  shall  hold  office  at  the  pleasure  of  the  commis-  compensa- 
sion.     It  shall  be  the  duty  of  such  manager  to  manage,  super-  anceSd. 
vise  and  conduct,  subject  to  the  general  direction  and  approval 

of  the  commission,  the  business  and  affairs  of  the  state  com- 
pensation insurance  fund  and  to  perform  such  other  duties  as 
the  commission  may  prescribe.  Before  entering  on  the  Bond, 
duties  of  his  office,  he  must  give  an  official  bond  in  the  sum 
of  $50,000,  and  take  and  subscribe  to  an  official  oath.  Said 
bond  must  be  approved  by  the  commission,  by  written  endorse- 
ment thereon,  and  be  filed  in  the  office  of  the  secretary  of  state. 

(4)  To    appoint    a   superintendent   of   the   department   of  fSSSnt'oi 
safety,  who  shall  hold  office  at  the  pleasure  of  the  commission  safety. 
and  who  shall  perform  such  duties  as  the  commission  shall 
prescribe. 

(5)  To  employ  such  other  assistants,  officers,  experts,  statis-  {$J^|m" 
ticians,  actuaries,  accountants,  inspectors,  referees  and  other 
employees,  as  it  may  deem  necessary  to  carry  out  the  provisions 

of  this  act,  or  to  perform  the  duties  and  exercise  the  powers 
conferred  by  law  upon  the  commission. 

Sec.  8.     All  officers  and  employees  of  the  commission  shall  SaIarlefl- 
receive  such  compensation  for  their  services  as  may  be  fixed 
by  the  commission  and  shall  hold  office  at  the  pleasure  of  the 


180 


INSURANCE   LAWS   OP   CALIFORNIA. 


Expenses. 


Apportion 
ment  of 
expenses. 


Blank 

forms. 


Hooks  of 
record. 


Powers. 
Fees. 


Reports 

and 

pamphlets 


commission  and  shall  perform  such  duties  as  are  imposed  on 
them  by  law  or  by  the  commission.  The  salaries  of  the  mem- 
bers of  the  commission,  its  attorney,  secretary  and  assistant 
secretary,  as  fixed  by  law  or  the  commission,  shall  be  paid 
in  the  same  manner  as  are  the  salaries  of  other  state  officers. 
The  salary  or  compensation  of  every  other  person  holding  office . 
or  employment  under  the  commission,  as  fixed  by  law  or  by  the 
commission,  shall  be  paid  monthly,  after  being  approved  by  the 
commission,  upon  claims  therefor  to  be  audited  by  the  state 
board  of  control.  All  expenses  incurred  by  the ( commission 
pursuant  to  the  provisions  of  this  act,  including  the  actual 
and  necessary  traveling  and  other  expenses  and  disbursements 
of  the  members  thereof,  its  officers  and  employees,  incurred 
while  on  business  of  the  commission,  either  within  or  without 
the  state,  shall,  unless  otherwise  provided  in  this  act,  be  paid 
from  the  funds  appropriated  for  the  use  of  the  commission, 
after  being  approved  by  the  commission,  upon  claims  therefor 
to  be  audited  by  the  board  of  control ;  provided,  however,  that 
no  such  expenses  incurred  outside  of  the  state  shall  be  allowed 
unless  prior  authorization  therefor  be  obtained  from  the  board 
of  control. 

Sec.  9.  In  all  cases  in  which  salaries,  expenses  or  outgoings 
of  one  department  under  the  jurisdiction  of  the  commission 
are  expended  in  whole  or  in  part  on  behalf  of  another  depart- 
ment the  commission  may  apportion  the  same  between  such 
departments. 

Sec.  10.  The  commission  shall  cause  to  be  printed  and  fur- 
nished free  of  charge  to  any  employer  or  employee,  or  other 
person,  such  blank  forms  as  it  shall  deem  requisite  to  facilitate 
or  promote  the  efficient  administration  of  this  act ;  it  shall  pro- 
vide a  book  in  which  shall  be  entered  the  minutes  of  all  its 
proceedings,  a  book  in  which  shall  be  recorded  all  awards  made 
by  the  commission  and  such  other  books  or  records- as  it  shall 
deem  requisite  for  the  proper  and  efficient  administration  of 
this  act;  all  such  records  to  be  kept  in  the  office  of  the  com- 
mission. 

Sec.  11.  The  commission  shall  also  have  power  and  au- 
thority : 

(1)  To  charge  and  collect  the  following  fees:  for  copies  of 
papers  and  records  not  required  to  be  certified  or  otherwise 
authenticated  by  the  commission,  ten  cents  for  each  folio;  for 
certified  copies  of  official  documents  and  orders  filed  in  its 
office  or  of  the  evidence  taken  on  proceedings  had,  fifteen  cents 
for  each  folio. 

.(2)   To  publish  and  distribute  in  its  discretion  from  time  to 
.  time,  in  addition  to  its  annual  report  to  the  governor  of  the 
state,  such  further  reports  and  pamphlets  covering  its  opera- 
tions, proceedings  and  matters  relative  to  its  work  as  it  may 
deem  advisable. 

(3)  To  fix  and  collect  reasonable  charges  for  publications 
issued  under  its  authority. 


COMPENSATION,   INSURANCE   AND   SAFETY   ACT.  181 

(•1)   The  fees  charged  and  collected  under  this  section  shall  Fees  paid 
be  paid  monthly  into  the  treasury  of  the  state  to  the  credit  of  Uustriai 
the  "industrial  accident  fund"  and  shall  be  accompanied  by  a  JJ^f,1?' 
detailed-  statement  thereof. 

Compensation. 
Sec.  12.     (a)   Liability  for  the  compensation  provided  by  'Compen- 
this  act,  in  lieu  of  any  other  liability  whatsoever,  shall,  without  payable- 
regard  to  negligence,  exist  against  an  employer  for  any  per- 
sonal injury  sustained  by  his  employees  by  accident  arising 
out  of  and  in  the  course  of  the  employment  and  for  the  death 
of  any  such  employee  if  the  injury  shall  proximately  cause 
dca tli.  in  those  cases  where  the  following  conditions  of  com- 
pensation concur:  Soyef1 

(1)  Where,  at  the  time  of  the  accident,  both  the  employer  and  em- 
;iiid  emplovee  are  subject  to  the  compensation  provisions  of  subjStato 
this  act.  ^edact: 

(2)  Where,  at  the  time  of  the  accident,  the  employee  is  per-  wheueni. 
forming  service  growing  out  of  and  incidental  to  his  employ-  dj?^^. 
ment  and  is  acting  within  the  course  of  his  employment  as  duty0™!!" K 
such.  ■* 

(3)  Where  the  injury  is  proximately  caused  by  accident,  Not  when 
either  with  or  without  negligence,  and  is  not  so  caused  by  the  ^used'hy" 
intoxication  or  the  wilful  misconduct  of  the  injured  employee.  |j*jxfca- 

(b)  Where  such  conditions  of  compensation  exist,  the  right  miscon- 
I.'   recover  such  compensation  pursuant  to  the  provisions  of  duct- 
Ibis  act.  shall  be  the  exclusive  remedy  against  the  employer  for  gjJJgJJJ" 
the  injury  or  death,  except  that  when  the  injury  was  caused  she 

by  the  employer's  gross  negligence  or  wilful  misconduct  and  uerJ1nee8gy 
such  act  or  failure  to  act  causing  such  injury  was  the  personal  ^0ps1^er 
act  <>r  failure  to  act  on  the  part  of  the  employer  himself,  or  if  negligent. 
the   employer  be   a   partnership   on   the  part   of  one   of   the 
partners,  or  if  a  corporation,  on  the  part  of  an  elective  officer 
or  officers  thereof,  and  such  act  or  failure  to  act  indicated  a 
wilful  disregard  of  the  life,  limb,  or  bodily  safety  of  employees, 
any  such  injured  employee  may,  at  his  option,  either  claim 
compensation  under  this  act  or  maintain  an  action  at  law  for 
damages. 

(c)  In  all  other  cases  where  the  conditions  of  compensation  liability 
do  not  concur,  the  liability  of  the  employer  snail  be  the  same  damages. 
■  ^  if  this  act  had  not  been  passed. 

Sec.  13.  The  term  ''employer"  as  used  in  sections  twelve p^r" 
to  thirty-five,  inclusive,  of  this  act  shall  be  construed  to  mean:  d«taed. 
The  state,  and  each  county,  city  and  county,  city,  school  dis- 
trict and  all  public  corporations  therein,  and  every  person, 
firm,  voluntary  association,  and  private  corporation  (includ- 
ing any  public  service  corporation)  who  has  any  person  in 
service  under  any  appointment  or  contract  of  hire,  or  appren- 
ticeship, express  or  implied,  oral  or  written,  and  the  legal 
representatives  of  any  deceased  employer. 


182 


INSURANCE   LAWS   OP   CALIFORNIA. 


Medical 
treatment 


Tmee"  ^EC#  ^'     ^^e  *erm  "empl°vee"  as  used  m  sections  twelve 

defined.  to  thirty-five,  inclusive,  of  this  act  shall  be  construed  to  mean : 
Every  person  in  the  service  of  an  employer  as  denned  bi- 
section thirteen  hereof  under  any  appointment  or  ■  contract 
of  hire  or  apprenticeship,  express  or  implied,  oral  or  written, 
including  aliens  and  also  including  minors,  but  excluding  any 
person  whose  employment  is  both  casual  and  not  in  the  usual 
course  of  the  trade,  business,  profession  or  occupation  of  his 
employer,  and  also  excluding  any  employee  engaged  in  farm, 
dairy,  agricultural,  viticultural  or  horticultural  labor,  in  stock 
or  poultry  raising  or  in  household  domestic  service. 

Scale  of  Compensation. 
Sec.  15.     Where  liability  for  compensation  under  this  act 
exists  such  compensation  shall  be  furnished  or  paid  by  the 
employer  and  be  as  provided  in  the  following  schedule : 

(a)  Such  medical,  surgical  and  hospital  treatment,  including 
nursing,  medicines,  medical  and  surgical  supplies,  crutches  and 
apparatus,  as  may  reasonably  be  required  at  the  time  of  the 
injury  and  within  ninety  days  thereafter,  to  cure  and  relieve 
from  the  effects  of  the  injury,  the  same  to  be  provided  by  the 
employer,  and  in  case  of  his  neglect  or  refusal  seasonably  to 
do  so,  the  employer  to  be  liable  for  the  reasonable  expense 
incurred  by  or  on  behalf  of  the  employee  in  providing  the  same. 

(b)  1.  If  the  accident  causes  disability,  a  disability  indem- 
nity which  shall  be  payable  for  one  week  in  advance  as  wages 
on  the  fifteenth  day  after  the  injured  employee  leaves  work 
as  a  result  of  the  injury,  and  thereafter  on  the  employer's 
regular  payday,  but  not  less  frequently  than  twice  in  each 
calendar  month,  unless  otherwise  ordered  by  the  commission, 
subject,  however,  to  the  following  limitations : 

(1)  If  the  period  of  disability  does  not  last  longer  than 
two  weeks  from  the  day  the  employee  leaves  work  as  the  result 
of  the  injury,  no  disability  indemnity  whatever  shall  be  recov- 
erable. 

(2)  If  the  period  of  disability  lasts  longer  than  two  weeks 
from  the  day  the  employee  leaves  work  as  the  result  of  the 
injury,  no  disability  indemnity  shall  be  recoverable  for  the 
first  two  weeks  of  such  disability. 

2.  The  disability  indemnity  payable  shall  be  as  follows : 
Temporary      (1)  If  the  accident  causes  temporary  total  disability,  sixty- 
five  per  cent  of  the  average  weekly  earnings  during  the  period 
of  such  disability ; 

(2)  If  the  accident  causes  temporary  partial  disability, 
sixty-five  per  cent  of  the  weekly  loss  in  wages  during  the  period 
of  such  disability ; 

(3)  If  the  temporary  disability  caused  by  the  accident  is 
at  times  total  and  at  times  partial,  the  weekly  disability 
indemnity  during  the  periods  of  each  such  total  or  partial 
disability  shall  be  in  accordance  with  paragraphs  (1)  and  (2) 
of  this  subdivision  respectively; 


Compensa 
tion, 
when 
payable. 


Compensa 
sat  ion  for- 


disability; 


COMPENSATION,    INSURANCE   AND    SAFETY    ACT.  183 

(4)  Paragraphs  (1),  (2)  and  (3)  of  this  subdivision  shall 
be  limited  as  follows:  aggregate  disability  indemnity  for  a 
single  injury  causing  temporary  disability  shall  not  exceed 
three  times  the  average  annual  earnings  of  the  employee,  nor 
shall  the  aggregate  disability  period  for  such  temporary  dis- 
ability in  any  event  extend  beyond  two  hundred  forty  weeks 
from  the  date  of  the  accident. 

(5)  If  the  accident  causes  permanent  disability,  the  per-  ^SK^ 
centage  of  disability  to  total  disability  shall  be  determined  and 

the  disability  indemnity  computed  and  allowed  as  follows :  for  a 
ten  per  cent  disability,  sixty-five  per  cent  of  the  average  weekly 
earnings  for  a  period  of  forty  weeks ;  for  a  twenty  per  cent  dis- 
ability, sixty-five  per  cent  of  the  average  weekly  earnings  for 
a  period  of  eighty  weeks;  for  a  thirty  per  cent  disability, 
sixty-five  per  cent  of  the  average  weekly  earnings  for  a  period 
of  one  hundred  twenty  weeks;  for  a  forty  per  cent  disability, 
sixty-five  per  cent  of  the  average  weekly  earnings  for  a  period 
of  one  hundred  sixty  weeks;  for  a  fifty  per  cent  disability, 
sixty-five  per  cent  of  the  average  weekly  earnings  for  a  period 
of  two  hundred  weeks;  for  a  sixty  per  cent  disability,  sixty- 
five  per  cent  of  the  average  weekly  earnings  for  a  period  of  two 
hundred  forty  weeks;  for  a  seventy  per  cent  disability,  sixty- 
live  per  cent  of  the  average  weekly  earnings  for  a  period  of 
two  hundred  forty  weeks,  and  thereafter  ten  per  cent  of  such 
weekly  earnings  during  the  remainder  of  life;  for  an  eighty 
per  cent  disability,  sixty-five  per  cent  of  the  average  weekly 
earnings  for  a  period  of  two  hundred  forty  weeks,  and  there- 
after twenty  per  cent  of  such  weekly  earnings  during  the 
remainder  of  life;  for  a  ninety  per  cent  disability,  sixty-five 
per  cent  of  the  average  weekly  earnings  for  a  period  of  two 
hundred  forty  weeks  and  thereafter  thirty  per  cent  of  such 
weekly  earnings  during  the  remainder  of  life;  for  a  hundred 
per  eent  disability,  sixty-five  per  cent  of  the  average  weekly 
earnings  for  a  period  of  two  hundred  forty  weeks  and  there- 
after forty  per  cent  of  such  weekly  earnings  during  the 
remainder  of  life. 

(6)  The  indemnity  for  permanent  disabilities  intermediate  inter- 
to  those  fixed  by  the  foregoing  schedule  shall  be  computed  and  Smpensa- 
allowed  as  follows :  if  under  seventy  per  cent,  sixty-five  per  JjJJ^  le 
cent  of  the  average  weekly  earnings  for  four  weeks  for  each 

one  per  cent  of  disability;  if  seventy  per  cent  or  over,  sixty- 
five  per  cent  of  the  average  weekly  earnings  for  two  hundred 
forty  weeks  and  thereafter  one  per  cent  of  such  weekly  earn- 
ings for  each  one  per  cent  of  disability  in  excess  of  sixty  per 
cent  to  be  paid  during  the  remainder  of  life. 

(7)  In  determining  the  percentages  of  permanent  disability, 
account  shall  be  taken  of  the  nature  of  the  physical  injury  or 
disfigurement,  the  occupation  of  the  injured  employee  and  his 
age  at  the  time  of  such  injury.. 


184 


INSURANCE   LAWS   OF    CALIFORNIA. 


SuS5tnot       (8)  '.Not^n&  contained  in  the  foregoing  schedule  of  perma- 
compensa-  nent  disability  indemnity  shall  be  held  to  limit  the  amount  of 
payable,     compensation  recoverable  for  any  such  permanent  injury  dur- 
ing any  period  of  total  incapacity  due  to  illness  resulting  from 
that  injury,  but  any  sum  so  received  shall  be  deducted  from 
the  compensation  payable  in  accordance  with  the  said  schedule 
permanent       (9)   The  following  permanent  disabilities  shall  be  conclu- 
drSesSmJd    sively  Presumed  to  be  total  in  character:  Loss  of  both  eyes  or 
•   the  sight  thereof;  loss  of  both  hands  or  the  use  thereof;  an 
injury  resulting  in  a  practically  total  paralysis;  an  injury  to 
the  brain  resulting  in  incurable  imbecility  or  insanity.     In  all 
other  cases,  permanent  total  disability  shall  be  determined  in 
accordance  with  the  fact. 

deithon  .  3\  The  death  of  the  inJurcd  employee  shall  not  affect  the 
liability,  liability  of  the  employer  under  subsections  (a)  and  (b)  of 
this  section,  so  far  as  such -liability  has  accrued  and  become 
payable  at  the  date  of  the  death,  and  any  accrued  and  unpaid 
compensation  shall  be  paid  to  the  dependents,  if  any,  without 
administration,  or  if  there  are  no  dependents,  to  the  personal 
representatives  of  the  deceased  employee  or  other  person 
entitled  thereto,  but  such  death  shall  be  deemed  to  be  the  ter- 
mination of  the  disability, 
benefits  W  ^  the  accident  causes  death,  either  with  or  without  dis- 

wnenre-      ability,. a  death  benefit  which  shall  be  payable  in  installments 
c  p  ent  s-  eqUaj  to  sixty-five  per  cent  of  the  average  weekly  earnings  of 
the  deceased  employee,  upon  the  employer's  regular  payday, 
but  not  less  frequently  than  twice  in  each  calendar  month, 
unless  otherwise  ordered  by  the  commission,  which  death  bene- 
fit shall  be  as  follows : 
wholly,  or      ( 1 )   In  case  the  deceased  employee  leaves  a  person  or  per- 
sons wholly  dependent  upon  him  for  support,  the  death  benefit 
shall  be  a  sum  sufficient,  when  added  to  the  disability  indemnity 
which,  at  the  time  of  death  has  accrued  and  become  payable, 
under  the  provisions  of  subsection    (b)   hereof,  to  make  the 
total   disability  indemnity   and  death   benefit  equal  to  three 
times  his  average  annual  earnings,  such  annual  earnings  to  be 
taken  at  not  less  than  three  hundred  and  thirty-three  dollars 
and  thirty-three  cents  nor  more  than  one  thousand  six  hundred 
and  sixty-six  dollars  and  sixty-six  cents. 
Partially         (2)  In  case  the  deceased  employee  leaves  no  person  wholly 
andT"  ent'  dependent  upon  him  for  support,  but  one  or  more  persons  par- 
tially dependent  therefor,  the  death  benefit  shall  be  such  per- 
centage of  three  times  such  average  annual  earnings  of  the 
employee  as  the  annual  amount  devoted  by  the  deceased  to  the 
support  of  the  person  or  persons  so  partially  dependent  bears 
to  such  average  annual  earnings;  provided,  that  the  death 
benefit  shall  not  be  greater  than  a  sum  sufficient,  when  added 
to  the  disability  indemnity  which,  at  the  time  of  the  death, 
has  accrued  and  become  payable  under  the  provisions  of  sub- 
section (6)  hereof  to  make  the  total  disability  indemnity  and 
death  benefit  equal  to  three  times  his  average  annual  earnings. 


COMPENSATION,   INSURANCE   AND    SAFETY    ACT.  185 

such  average  annual  earnings  to  be  taken  at  not  less  than  three 
hundred  and  thirty-three  dollars  and  thirty-three  cents  nor 
more  than  one  thousand  six  hundred  and  sixty-six  dollars  and 
sixty-six  cents. 

(3)   If  the  deceased  employee  leaves  no  person  dependent  ^enVde™ 
upon  him  for  support,  the  death  benefit  shall  consist  of  the  pendents. 
reasonable  expenses  of  his  burial  not  exceeding  one  hundred 
dollars  and  such  further  death  benefit  as  may  be  provided  by 
law. 

(d)  Payment  of  compensation  in  accordance  with  the  order 
and  direction  of  the  commission  shall  discharge  the  employer 
from  all  claims  therefor. 

Sec.  16.     (a)  Unless  compensation  is  paid  or  an  agreement  Forfeiture 
for  its  payment  made  within  the  time  limited  in  this  section  of  rignts- 
for  the  institution  of  proceedings  for  its  collection,  the  right  to 
institute  such  proceedings  shall  be  wholly  barred. 

(6)  The  periods  within  which  proceedings  for  the  collection 
of  compensation  may  be  commenced  are  as  follows : 

(1)  Proceedings  for  the  collection  of  the  benefit  provided  Jj[!{}jfof 
by  subsection  (a)  of  section  fifteen  or  for  the  collection  of  the 
disability  indemnity  provided  by  subsection   (&)  of  said  sec-    ■ 
tion  fifteen  must  be  commenced  within  six  months  from  the 

date  of  the  accident,  except  as  otherwise  provided  in  this  act. 

(2)  Proceedings  for  the  collection  of  the  death  benefit  pro- 
vided by  subsection  (c)  of  said  section  fifteen  must  be  com- 
menced within  one  year  from  the  date  of  death*  and  in  any 
event  within  two  hundred  forty  weeks  from  the  date  of  the 
accident,  and  can  only  be  maintained  when  it  appears  that 
death  ensued  within  one  year  from  the  date  of  the  accident,  or 
that  the  accident  causing  death  also  caused  disability  which 
continued  to  the  date  of  the  death  and  for  which  a  disability 
indemnity  was  paid,  or  an  agreement  for  its  payment  made,  or 
proceedings  for  its  collection  commenced  within  the  time  lim- 
ited for  the  commencement  of  proceedings  for  the  recovery  of 
the  disability  indemnity. 

(c)  The  payment  of  the  disability  indemnity  or  death  ben-  Extension 
efit,  or  any  part  thereof,  or  agreement  therefor,  shall  have  the  ° 
effect  of  extending  the  period  within  which  proceedings  for 

its  collection  may  be  commenced,  six  months  from  the  date 
of  the  agreement  or  last  payment  of  such  disability  indemnity 
or  death  benefit  or  any  part  thereof. 

(d)  If  an  injured  employee,  or  in  the  case  of  his  death,  one  Minora  and 
or  more  of  his  dependents,  shall  be  a  minor  or  incompetent  at (1(,fp(t,ves- 
any  time  when  any.  right  or  privilege  accrues  to  such  person 

under  the  provisions  of  this  act,  a  general  guardian,  appointed 
by  the  court  or  a  guardian  ad  litem  or  trustee  appointed  by 
the  commission  or  a  commissioner  may,  on  behalf  of  any  such 
person,  claim  and  exercise  any  such  right  or  privilege  with  the 
same  force  and  effect  as  if  no  such  disability  existed ;  and  no 
limitation  of  time  provided  by  this  act  shall  run  against  any 
such  minor  or  incompetent  unless  and  until  such  guardian  or 
trustee  is  appointed. 


186  INSURANCE   LAWS  OF   CALIFORNIA 

Effect  of f        (e)  No  compensation  shall  be  payable  in  respect  of  the  death 
medical0     or  disability  of  an  employee  if  his  death  is  caused,  or  if  and  so 
treatment.  far  ^  j^g  disability  is  caused,  continued,  or  aggravated,  by  an 
unreasonable  refusal  to  submit  to  medical  treatment,  or  to  any 
surgical  treatment,  the  risk  of  which  is,  in  the  opinion  of  the 
,     commission,  inconsiderable  in  view  of  the  seriousness  of  the 
injury. 
Previous         (/")   The  fact  that  an  employee  has  suffered  a  previous  dis- 
no  bar!*7    ability,  or  receives  compensation  therefor,  shall  not  preclude 
him  from  compensation  for  a  later  injury,  or  his  depend- 
ents from  compensation  for  death  resulting  therefrom,  but 
in  determining  compensation  for  the  later  injury,  or  death 
resulting  therefrom,  his  average  annual  earnings  shall  be  fixed 
at  such  sum  as  will  reasonably  represent  his  annual  earning 
capacity  at  the  time  of  the  later  injury, 
during"*         (&)  Any  payment?    allowance   or   benefit   received  by  the 
incapacity  injured  employee  during  the  period  of  his  incapacity,  or  by 
admission  his  dependents  in  the  event  of  his  death,  which  by  the  terms  of 
oHiabiiity,  thjs  aet  was  n0{.  tjjen  fiue  an(j  payable  or  when  there  is  any 

dispute  or  question  concerning  the  right  to  compensation,  shall 
not,  in  the  absence  of  any  agreement,  be  construed  to  be  an 
admission  of  liability  for  compensation  on  the  part  of  the 
employer,  or  the  acceptance  thereof  as  a  waiver  of  any  right 
or  claim  which  the  employee  or  his  dependents  may  have 
against  the  employ er,  but  any  such  payment,  allowance  or 
benefit  may  be  taken  into  account  by  the  commission  in  fixing 
the  amount  of  the  compensation  to  be  paid. 
Average  Sec.  17.  (a)  The  average  weekly  earnings  referred  to  in 
andkannuai  section  fifteen  hereof  shall  be  one  fifty-second  of  the  average 
earnings,  annual  earnings  of  the  employee ;  in  computing  such  earnings 
his  average  annual  earnings  shall  be  taken  at  not  less  than  three 
hundred  and  thirty-three  dollars  and  three-three  cents,  nor  at 
more  than  one  thousand  six  hundred  and  sixty-six  dollars  and 
sixty-six  cents  and  between  said  limits  shall  be  arrived  at  as 
follows : 
computing!  W  ^  the  injured  employee  has  worked  in  the  same  employ- 
ment, whether  for  the  same  employer  or  not,  during  substan- 
tially the  whole  of  the  year  immediately  preceding  his  injury, 
his  average  annual  earnings  shall  consist  of  three  hundred  times 
the  average  daily  earnings,  wage  or  salary  which  he  earned  as 
such  employee  during  the  days  when  so  employed. 

(2)  If  the  injured  employee  has  not  so  worked  in  such  em- 
ployment during  substantially  the  whole  of  such  immediately 
preceding  year,  his  average  annual  earnings  shall  consist  of 
three  hundred  times  the  average  daily  earnings,  wage  or  salary 
which  an  employee  of  the  same  class,  working  substantially  the 
whole  of  such  immediately  preceding  year,  in  the  same  or  a 
similar  kind  of  employment,  in  the  same  or  a  neighboring  place, 
earned  during  the  days  when  so  employed. 

(3)  In  every  case  where  for  any  reason  the  foregoing 
methods  of  arriving  at  the  average  annual  earnings  of  the 
injured  employee  can  not  reasonably  and  fairly  be  applied, 


COMPENSATION,   INSURANCE   AND   SAFETY   ACT.  187 

such  annual  earnings  shall  be  taken  at  such  sum  as,  having 
regard  to  the  previous  earnings  of  the  injured  employee,  and 
of  other  employees  of  the  same  or  most  similar  class,  working 
in  the  same  or  most  similar  employment,  in  the  same  or  neigh- 
boring locality,  shall  reasonably  represent  the  average  annual 
earning  capacity  of  the  injured  employee  at  the  time  of  the 
injury  in  the  kind  of  employment  in  which  he  was  then  work- 
ing, or  in  any  employment  similar  thereto. 

( b )  In   determining  such   average   weekly   earnings,   there  deluded  in 
shall  be  included  the  market  value  of  board,  lodging,  fuel  and  estimate, 
other  advantages  received  by  the  injured  employee,  as  part 

of  his  remuneration  and  which  can  be  estimated  in  money,  but 
such  average  weekly  earnings  shall  not  include  any  sum  which 
the  employer  paid  to  the  injured  employee  to  cover  any  special 
expenses  entailed  on  him  by  the  nature  of  his  employment. 

(c)  If  the  injured  employee  is  a  minor,  and  his  incapacity,  msCanse0ef 
whether  total  or  partial,   is  permanent,  his  average  weekly  a  minor, 
earnings  shall  be  deemed,  within  the  limits  fixed,  to  be  the 
weekly   sum,    that   under    ordinary    circumstances   he   would 
probably  be  able  to  earn  after  attaining  the  age  of  twenty-one 
years,  in  the  occupation  in  which  he  was  employed  at  the  time 

of  the  injury,  if  he  had  not  been  injured. 

Sec.  18.     The  weekly  loss  in  wages  referred  to  in  section  ^sese^fy 
fifteen  hereof  shall  consist  of  the  difference  between  the  average  wages. 
weekly  earnings  of  the  injured  employee,  computed  according 
to  the  provisions  of  said  section,  and  the  weekly  amount  which   . 
the  injured  employee,  in  the  exercise  of  reasonable  diligence, 
will  probably  be  able  to  earn   during  the   disability,   to  be 
determined  in  view  of  the  nature  and  extent  of  the  injury. 
In  computing  such  probable  earnings  due  regard  shall  be  had 
to  the  ability  of  the  injured  employee  to  compete  in  an  open 
labor  market. 

Dependents  Defined. 
Sec.  19.     (a)  The  following  shall  be  conclusively  presumed  ?2SSJJ 
to  be  wholly  dependent  for  support  upon  a  deceased  employee :  wholly" 

(1)  A  wife  upon  a  husband  with  whom  she  was  living  at  the  deP€ndent- 
time  of  his  death. 

(2)  A  husband  upon  a  wife  upon  whose  earnings  he  is  par- 
tially or  wholly  dependent  at  the  time  of  her  death. 

(3)  A  child  or  children  under  the  age  of  eighteen  years  (or 
over  said  age,  but  physically  or  mentally  incapacitated  from 
earning)  upon  the  parent  with  whom  he  or  they  are  living 
at  the  time  of  the  death  of  such  parent  or  for  whose  main- 
tenance such  parent  was  legally  liable  at  the  time  of  his  death, 
there  being  no  surviving  dependent  parent. 

(b)   In  all  other  cases,  questions  of  entire  or  partial  depend-  Depend- 
ency and  questions  as  to  who  constitute  dependents  and  the  question 
extent  of  their  dependency  shall  be  determined  in  accordance  of  fact' 
with  the  fact,  as  the  fact  may  be  at  the  time  of  the  death  of  the 
employee. 


188 


INSURANCE   LAWS   OF   CALIFORNIA. 


Who  are 
not  de- 
pendents. 


Death 
benefits— 
to  whom 
payable. 


Commis- 
sion to 
apportion 
payments. 


Notice  to 

employer. 

Within 

thirty 

days. 


Excep- 
tions. 


(c)  No  person  shall  be  considered  a  dependent  of  any  de- 
ceased employee  unless  a  member  of  the  family  of  such  em- 
ployee or  unless  such  person  bears  to  such  employee  the  relation 
of  husband  or  wife,  child,  adopted  child  or  stepchild,  father  or 
mother,  father-in-law  or  mother-in-law,  grandfather  or  grand- 
mother, brother  or  sister,  nephew  or  niece. 

(d)  1.  If  there  is  one  or  more  persons  wholly  dependent  for 
support  upon  a  deceased  employee,  such  person  or  persons  shall 
receive  the  entire  death  benefit,  and  any  person  or  persons 
partially  dependent  shall  receive  no  part  thereof,  unless  other- 
wise ordered  by  the  commission. 

2.  If  there  is  more  than  one  such  person  wholly  dependent 
for  support  upon  a  deceased  employee,  the  death  benefit  shall 
be  divided  equally  among  them,  unless  otherwise  ordered  by 
the  commission. 

3.  If  there  is  more  than  one  person  partially  dependent  for 
support  upon  a  deceased  employee,  and  no  person  wholly 
dependent  for  support,  the  amount  allowed  as  the  death  benefit 
shall  be  divided  among  the  persons  so  partially  dependent  in 
proportion  to  the  relative  extent  of  their  dependency,  unless 
otherwise  ordered  by  the  commission. 

(e)  The  death  benefits  shall  be  paid  to  such  one  or  more  of 
the  dependents  of  the  deceased,  or  to  a  trustee  appointed  by 
the  commission,  or  a  commissioner,  for  the  benefit  of  the  person 
or  persons  entitled,  as  may  be  determined  by  the  commission, 
and  the  commission  may,  anything  in  this  act  contained  to  the 
contrary  notwithstanding,  apportion  such  benefits  among  the 
dependents  in  proportion  to  their  respective  needs  and  as  may 
be  just  and  equitable,  and  may  order  payment  to  a  dependent 
subsequent  in  right,  or  not  otherwise  entitled,  upon  good  cause 
being  shown  therefor.  The  person  to  whom  the  death  benefit 
is  paid  for  the  use  of  the  several  beneficiaries  shall  apply  the 
same  in  compliance  with  the  findings  and  directions  of  the 
commission. 

Notice  of  Injury. 
Sec.  20.  No  claim  to  recover  compensation  under  this  act 
shall  be  maintained  unless  within  thirty  days  after  the  occur- 
rence of  the  accident  which  is  claimed  to  have  caused  the  injury 
or  death,  notice  in  writing,  stating  the  name  and  the  address 
of  the  person  injured,  the  time  and  the  place  where  the  acci- 
dent occurred,  and  the  nature  of  the  injury,  and  signed  by  the 
person  injured  or  some  one  in  his  behalf,  or  in  case  of  his 
death,  by  a  dependent  or  some  one  in  his  behalf,  shall  be  served 
upon  the  employer;  provided,  however,  that  actual  knowledge 
of  such  accident  and  injury  on  the  part  of  such  employer,  or 
his  managing  agent  or  superintendent  in  charge  of  the  work, 
upon  which  the  injured  .employee  was  engaged  at  the  time  of 
the  injury,  shall  be  equivalent  to  such  service;  and  provided, 
further,  that  the  failure  to  give  any  such  notice,  or  any  defect 
or  inaccuracy  therein,  shall  not  be  a  bar  to  recovery  under  this 
act  if  it  is  found  as  a  fact  in  the  proceedings  for  the  collection 


examina- 
tion. 


COMPENSATION,    INSURANCE   AND    SAFETY    ACT.  189 

of  the  claim  that  there  was  no  intention  to  mislead  or  prejudice 
the  employer,  and  that  he  was  not  in  fact  misled  or  prejudiced 
thereby. 

Examination  by  Physician. 
Sec.  21.     (a)   Whenever  in  case  of  injury  the  right  to  com-  Medical 
pensation  under  this  act  would  exist  in  favor  of  any  employee, "~ 
he  shall,  upon  the  written  request  of  his  employer,  submit  from 
time  to  time  to  examination  by  a  practicing  physician,  who 
shall  be  provided  and  paid  for  by  the  employer,  and  shall  like- 
wise submit  to  examination  from  time  to  time  by  any  physician 
selected  by  the  commission  or  any  member  or  referee  thereof. 
'(b)   The  request  or  order  for  such  examination  shall  fix  a 
time  and  place  therefor,  due  regard  being  had  to  the  conven- 
ience of  the  employee  and  his  physical  condition  and  ability  to 
attend  at  the  time  and  place  fixed.     The  employee  shall  be 
entitled  to  have  a  physician  provided  and  paid  for  by  himself   ' 
present  at  any  such  examination.     So  long  as  the  employee,  Befuaai to 
after  such  written  request  of  the  employer,  shall  fail  or  refuse  SSSJna" 
to  submit  to  such  examination  or  shall  in  any  way  obstruct  the  tion- 
same,  his  right  to  begin  or  maintain  any  proceeding  for  the 
collection  of  compensation  shall  be  suspended,  and  if  he  shall 
fail  or  refuse  to  submit  to  such  examination  after  direction  by 
the  commission,  or  any  member  or  referee  thereof,  or  shall  in 
any  way  obstruct  the  same,  his  righl  to  the  weekly  indemnity 
which  shall  accrue  and  become  payable  during  the  period  of 
such   failure,   refusal   or   obstruction,   shall   be   barred.     Any 
physician  who  shall  make  or  be  present  at  any  such  examina- 
tion may  be  required  to  testify  as  to  the  results  thereof. 

Hearings. 

Sec.  22.  Upon  filing  with  the  commission  by  any  party  in  Appiica- 
interest  of  an  application  in  writing  stating  the" general  nature  hlTrin^on 
of  any  dispute  or  controversy  concerning  compensation,  or  disPute- 
concerning  any  right  of  liability  arising  out  of,  or  incident 
thereto,  jurisdiction  over  which  is  vested  by  this  act  in  the 
commission,  a  time  and  place  shall  be  fixed  for  the  hearing 
thereof,  which  shall  be  not  less  than  ten  days  nor  more  than 
forty  days  after  the  filing  of  such  application.  The  person 
filing  such  application  shall  be  known  as  the  applicant  and  the 
adverse  party  shall  be  known  as  the  defendent.  A  copy  of 
said  application,  together  with  a  notice  of  the  time  and  place 
of  hearing  thereof,  shall  forthwith  be  served  upon  all  adverse 
parties  and  may  be  served  either  as  a  summons  in  a  civil 
action  or  in  the  same  manner  as  any  other  notice  that  is 
authorized  or  required  to  be  served  under  the  provisions  of 
this  act.  A  notice  of  the  time  and  place  of  hearing  shall  also 
be  served  upon  the  applicant. 

Sec.  23.     If  any  defendant  desires  to  disclaim  any  interest  Defend- 
in  the  subject-matter  of  the  claim  in  controversy,  or  considers  aSswer, 
that  the  application  is  in  any  respect  inaccurate  or  incomplete, 
or  desires  to  bring  any  fact,  paper  or  document  to  the  attention 


190 


INSURANCE   LAWS  OP   CALIFORNIA. 


Pleadings. 

Testimony 
Witnesses. 
Inspection. 


Stipulation 
of  facts. 


Findings 
and  award 


Nominal 

disability 

indemnity. 


Orders 
may  be 
rescinded, 
altered  or 
amended. 


of  the  commission  as  a  defense  to  the  claim,  or  otherwise,  he 
must  within  five  days  after  the  service  of  the  application  upon 
him,  file  with  or  mail  to  the  commission  his  answer  setting 
forth  the  particulars  in  which  the  application  is  inaccurate  or 
incomplete,  and  the  facts  upon  which  he  intends  to  rely.  A 
copy  of  such  answer  must  be  forthwith  served  upon  all  adverse 
parties. 

Sec.  24.  (a)  No  pleadings,  other  than  the  application  and 
answer,  shall  be  required.  The  hearing  on  the  application 
may  be  adjourned  from  time  to  time  and  from  place  to  place 
in  the  discretion  of  the  commission.  Either  party  shall  have 
the  right  to  be  present  at  any  hearing,  in  person  or  by  attorney 
or  by  any  other  agent,  and  to  present  such  testimony  as  shall 
be  pertinent  under  the  pleadings,  but  the  commission  may,  with 
or  without  notice  to  either  party,  cause  testimony  to  be  taken, 
or  inspection  of  the  premises  where  the  injury  occurred  to  be 
made,  or  the  time-books  and  pay  roll  of  the  employer  to  be 
examined  by  any  commissioner  or  any  referee  appointed  by 
the  commission,  and  may  from  time  to  time  direct  any  em- 
ployee claiming  compensation  to  be  examined  by  a  regular 
physician ;  the  testimony  so  taken  and  the  results  of  any  such 
inspection  or  examination  to  be  reported  to  the  commission  for 
its  consideration. 

(6)  The  parties  to  a  controversy  may  stipulate  the  facts 
relative  thereto  in  writing  and  file  such  stipulation  with  the 
commission.  The  commission  may  thereupon  make  its  findings 
and  award  based  upon  such  stipulation,  or  may  in  its  discretion 
set  the  matter  down  for  hearing  and  take  such  further  testi- 
mony or  make  such  further  investigations  as  may  be  necessary 
to  enable  it  to  completely  determine  the  matter  in  controversy. 

Sec.  25.  (a)  After  final  hearing  by  the  commission,  it 
shall,  within  thirty  days,  make  and  file  (1)  its  findings  upon 
all  facts  involved  in  the  controversy  and  (2)  its  award  which 
shall  state  its  determination  as  to  the  rights  of  the  parties. 

(&)  The  commission  in  its  award  may  fix  and  determine  the 
total  amount  of  compensation  to  be  paid  and  specify  the  man- 
ner of  payment,  or  may  fix  and  determine  the  weekly  disability 
indemnity  to  be  paid  and  order  payment  thereof  during  the 
continuance  of  such  disability. 

(c)  If,  in  any  proceeding  under  sections  twelve  to  thirty- 
five,  inclusive,  of  this  act,  it  is  proved  that  an  accident  has 
happened  for  which  the  employer  would  be  liable  to  pay  com- 
pensation if  disability  had  resulted  therefrom,  but  it  is  not 
proved  that  any  incapacity  had  resulted,  the  commission  may, 
instead  of  dismissing  the  application,  award  a  nominal  dis- 
ability indemnity,  if  it  appears  that  disability  is  likely  to  result 
at  a  future  time. 

(d)  The  commission  shall  have  continuing  jurisdiction  over 
all  its  orders,  decisions  and  awards  made  and  entered  under 
the  provisions  of  sections  twelve  to  thirty-five,  inclusive,  of 
this  act  and  may  at  any  time,  upon  notice,  and  after  oppor- 
tunity to  be  heard  is  given  to  the  parties  in  interest,  rescind, 


COMPENSATION,   INSURANCE   AND   SAFETY   ACT.  191 

alter  or  amend  any  such  order,  decision  or  award  made  by  it 
upon  good  cause  appearing  therefor ;  provided,  that  no  award 
of  compensation  shall  be  rescinded,  altered  or  amended  after 
two  hundred  forty-five  weeks  from  the  date  of  the  accident. 
Any  order,  decision  or  award  rescinding,  altering  or  amending 
a  prior  order,  decision  or  award  shall  have  the  same  effect  as 
is  herein  provided  for  original  orders,  decisions  or  awards. 

Sec.  26.  (a)  Any  party  affected  thereby  may  file  a  certi-  JSJ**'0* 
tied  copy  of  the  findings  and  award  of  the  commission  with  the 
clerk  of  the  superior  court  for  any  county,  or  city  and  county, 
and  judgment  must  be  entered  by  the  clerk  in  conformity 
therewith  immediately  upon  the  filing  of  such  findings  and 
award. 

(b)  The  certified  copy  of  the  findings  and  award  of  the  ^gment 
commission  and  a  copy  of  the  judgment  shall  constitute  the 
judgment  roll.     The  pleadings,  all  orders  of  the  commission, 

its  original  findings  and  award,  and  all  other  papers  or  docu- 
ments filed  in  the  cause  shall  remain  on  file  in  the  office  of  the 
commission. 

(c)  The  commission,  or  any  member  thereof,  may  stay  the  f^uon 
execution  of  any  judgment  entered  upon  an  award  of  the 
commission,  upon  good  cause  appearing  therefor  and  upon 

such  terms  and  conditions  as  may  be  imposed.  A  certified 
copy  of  such  order  shall  be  filed  with  the  clerk  entering  such 
judgment. 

(d)  Satisfaction  of  a  judgment  entered  upon  the  award  of  tkmSofC" 
the  commission  may  be  entered  in  the  manner  provided  by  law  Judgment. 
for  the  satisfaction  of  judgment.    When  a  judgment  is  satis- 
fied in  fact,  otherwise  than  upon  an  execution,  the  commission 

may,  upon  motion  of  either  party  or  of  its  own  motion,  order 
the  entry  of  satisfaction  of  the  judgment  to  be  made,  and  upon 
filing  a  certified  copy  of  such  order  with  the  said  clerk,  he  shall 
thereupon  enter  such  satisfaction. 

Sec.  27.     The  orders,  findings,  decisions  or  awards  of  the  Review  by 
commission  made  and  entered  under  sections  twelve  to  thirty- courts- 
five,  inclusive,  of  this  act  may  be  reviewed  by  the  courts  speci- 
fied in  sections  eighty-four  and  eighty-five  hereof  and  within 
the  time  and  in  the  manner  therein  specified  and  not  other- 
wise. 

Sec.  28.  No  fees  shall  be  charged  by  the  clerk  of  any  court  Go^s- 
for  the  performance  of  any  official  service  required  by  this  act, 
except  for  the  docketing  of  awards  as  judgments  and  for  certi- 
"fied  copies  of  transcripts  thereof.  In  all  proceedings  under 
this  act  before  the  commission,  costs  as  between  the  parties 
shall  be  allowed  or  not  in  the  discretion  of  the  commission  and 
the  commission  may  in  its  discretion,  where  payments  of  com- 
pensation have  been  unreasonably  delayed,  allow  the  bene- 
ficiary thereof  interest  thereon,  at  not  to  exceed  one  and  one 
half  per  cent  per  month,  during  such  period  of  delay. 

Liens. 

Sec.  29.     (a)  No  claim  for  compensation  shall  be  assign-  mse^Jf °"f 
able  before  payment,  but  this  provision  shall  not  affect  the  claim, 
survival  thereof,  nor  shall  any  claim  for  compensation,   or 


192 


INSURANCE   LAWS   OP   CALIFORNIA. 


Attorney's 
fee. 


Medical 
expense. 


Burial 
expense. 


Other 
liens. 


compensation  awarded,  adjudged  or  paid,  be  subject  to  be 
taken  for  the  debts  of  the  party  entitled  to  such  compensation, 
except  as  hereinafter  provided. 

(&)  The  commission  may  fix  and  determine  and  allow  as  a 
lien  against  any  amount  to  be  paid  as  compensation: 

(1)  A  reasonable  attorney's  fee  for  legal  services  pertaining 
to  any  claim  for  compensation  or  application  filed  therefor 
and  the  reasonable  disbursements  in  connection  therewith. 

(2)  The  reasonable  expense  incurred  by  or  on  behalf  of 
the  injured  employee  and  for  which  the  employer  is  liable 
under  the  provisions  of  subsection  (a)  of  section  fifteen  hereof. 

(3)  The  reasonable  burial  expenses  of  the  deceased  em- 
ployee, not  to  exceed  the  sum  of  one  hundred  dollars. 

(c)  If  notice  in  writing  be  given  to  the  employer  setting 
forth  the  nature  and  extent  of  any  claim,  that  may  be  allowed 
as  a  lien,  the  said  claim  shall  be  a  lien  against  any  amount 
thereafter  to  be  paid  as  compensation,  subject  to  the  deter- 
mination of  the  amount  and  approval  thereof  by  the  commis- 
sion. The  commission  may,  in  its  discretion,  order  the  amount 
of  such  claim  as  fixed  and  allowed  by  it  paid  directly  to  the 
person  entitled,  either  in  a  lump  sum  or  in  installments. 

(d)  No  claim  or  agreement  for  the  legal  services  or  dis- 
bursements mentioned  in  paragraph  (1)  of  subsection  (6) 
hereof,  or  for  the  expense  mentioned  in  paragraph  (2)  of 
said  subsection  (6),  in  excess  of  a  reasonable  amount,  shall  be 
valid  or  binding  in  any  respect. 

(e)  A  claim  for  compensation  for  the  injury  or  death  of 
any  employee,  or  any  award  or  judgment  entered  thereon, 
shall  have  the  same  preference  over  the  other  unsecured  debts 
of  the  employer  as  is  given  by  law  to  claims  for  wages.  Such 
preference  shall  be  for  the  entire  amount  of  compensation  to 
be  paid,  but  this  section  shall  not  impair  the  lien  of  any  pre- 
vious award. 

Liability  of  Principals  and  Contractors. 
Sec.  30.     The   liability  of  principals  and  contractors   for 
compensation  under  this  act,  when  other  than  the  immediate 
employer  of  the  injured  employee,  shall  be  as  follows : 

(a)  The  principal,  any  general  contractor  and  each  inter- 
mediate contractor  who  undertakes  to  do,  or  contracts  with 
another  to  do,  or  to  have  done,  any  work,  shall  be  liable  to 
pay  to  any  employee  injured  while  engaged  in  the  execution 
of  such  work,  or  to  his  dependents  in  the  event  of  his  death, 
any  compensation  which  the  immediate  employer  is  liable  to 
pay. 

(b)  The  person  entitled  to  such  compensation  shall  have  the 
immediate  right  to  recover  the  same  directly  from  his  immediate  employer, 
employer.    an(j  jn  a(jdition  thereto  the  right  to  enforce  in  his  own  name, 

in  the  manner  provided  by  this  act,  the  liability  for  compen- 
sation imposed  upon  other  persons  by  this  section,  either  by 
making  such  other  persons  parties  to  the  original  application 
or  by  filing  a  separate  application;  provided,  however,  that 
payment  in  whole  or  in  part  of  such  compensation  by  either 


Claim 
for  legal 
services 
limited. 


Preference 
of  claim. 


Who  may 
be  held 
liable. 


Recovery 
from 


COMPENSATION,   INSURANCE   AND   SAFETY   ACT.  193 

the  immediate  employer  or  other  person  shall,  to  the  extent  of 
such  payment,  be  a  bar  to  recovery  against  the  other  by  any 
person  entitled  to  such  compensation. 

(c)   When  any  person,  other  than  the  immediate  employer,  ^covery 
shall  have  paid  any  compensation  for  which  he  would  not  have  Son™rIi-r~ 
been  liable  independently  of  this  section,  he  shall,  unless  he  g^|^ 
caused  the  injury,  be  entitled  to  recover  the  full  amount  so 
paid  from  the  person  primarily  liable  therefor. 


(d)   The  liability  imposed  by  this  section  upon  such  prin- 


Limita- 
tions 


cipal,  general  contractor  and  intermediate  contractor  shall  be  imposed, 
subject  to  the  following  limitations : 

(1)  Such  liability  shall  exist  only  in  cases  where  the  injury 
occurred  on  or  in  or  about  the  premises  on  which  the  principal, 
general  contractor  or  intermediate  contractor  has  undertaken 
to  execute  any  work,  or  when  such  premises  or  work  are  other- 
wise under  his  control  or  management. 

(2)  Such  liability  shall  not  exist  in  the  event  that  the  imme-  inSUranee 
diate  employer,  or  other  person  primarily  liable  for  the  com-  Jjj^{]ftrges 
pensation  shall,  previous  to  the  happening  of  such  accident, 

have  taken  out,  and  maintained  in  full  force  and  effect,  com- 
pensation insurance  with  any  insurance  carrier,  covering  his 
full  liability  for  compensation  to  the  injured  person  or  his 
dependents. 

(3)  The  commission  may,  in  its  discretion,  order  that  execu- 
tion against  the  principal,  general  contractor  and  any  inter- 
mediate contractor,  be  stayed  until  execution  against  the 
immediate  employer  shall  be  returned  unsatisfied. 

Sec.  31.  The  making  of  a  lawful  claim  against  an  employer  JX^su.-- 
f or  compensation  under  this  act  for  the  injury  or  death  of  his  ceeds  to 
employee  shall  operate  as  an  assignment  to  the  employer  of  !ngtort. 
any  right  to  recover  damages  which  the  injured'  employee,  or 
his  personal  representative,  or  other  person,  may  have  against 
any  other  party  for  such  injury  or  death,  and  such  employer 
shall  be  subrogated  to  any  such  right  and  may  enforce  in  his 
own  name  the  legal  liability  of  such  other  party.  The  amount 
of  compensation  paid  by  the  employer,  or  the  amount  of  com- 
pensation to  which  the  injured  employee  or  his  dependents  is 
entitled,  shall  not  be  admissible  in  evidence  in  any  action 
brought  to  recover  damages,  but  any  amount  collected  by  the 
employer,  under  the  provisions  of  this  section,  in  excess  of 
the  amount  paid  by  the  employer,  or  for  which  he  is  liable, 
shall  be  held  by  him  for  the  benefit  of  the  injured  employee 
or  other  person  entitled. 

Releases  and  Settlement  Agreements. 
Sec.  32.     (a)  No  contract,  rule  or  regulation  shall  exempt  Enipl0yer 
the  employer  from  liability  for  the  compensation  fixed  by  this  can  not 
act,  but  nothing  in  this  act  contained  shall  be  construed  as  liability. 
impairing  the  right  of  the  parties  interested  to  settle,  subject 
to  the  provisions  herein  contained,  any  liability  which  may  be 
claimed  to  exist  under  this  act  on  account  of  such  injury  or 
death,  or  as  conferring  upon  the  dependents  of  any  injured 

13— IL 


194 


INSURANCE   LAWS   OF   CALIFORNIA. 


Settlement 
to  be  for 
full 

amount 
unless 
approved 
by  the 
commis- 
sion. 


Release  to 
be  filed 
with  the 
commis- 
sion. 


Facts 
which 
must 
appear 
in  all 
settle- 
ments. 


Commis- 
sion may 
commute 
compensa- 
tion to 
lump  sum. 


Methods 
of  com- 
puting 
lump  sum 
settle- 
ments. 


employee  any  interest  which  such  employee  may  not  divert  by 
such  settlement  or  for  which  he,  or  his  estate,  shall,  in  the 
event  of  such  settlement  by  him,  be  accountable  to  such  depend- 
ents or  any  of  them. 

(b)  The  compensation  herein  provided  shall  be  the  measure 
of  the  responsibility  which  the  employer  has  assumed  for 
injuries  or  death  that  may  occur  to  employees  in  his  employ- 
ment when  subject  to  the  provisions  of  this  act,  and  no  release 
of  liability  or  settlement  agreement  shall  be  valid  unless  it 
provides  for  the  payment  of  full  compensation  in  accordance 
with  the  provisions  of  this  act  or  until  and  unless  it  shall  be 
approved  by  the  commission. 

(c)  A  copy  of  any  such  release  or  settlement  agreement 
signed  by  both  parties  shall  forthwith  be  filed  with  the  com- 
mission. When  such  release  or  settlement  agreement  is  filed 
with  the  commission  and  approved  by  it,  the  commission  may 
of  its  own  motion,  or  on  the  application  of  either  party,  with- 
out notice,  enter  its  award  based  upon  such  release  or  settle- 
ment agreement. 

(d)  Every  such  release  or  settlement  agreement  shall  be  in 
writing,  duly  executed  and  attested  by  two  disinterested  wit- 
nesses, and  shall  specify  the  date  of  the  accident,  the  average 
weekly  wages  of  the  employee,  determined  according  to  section 
seventeen  hereof,  the  nature  of  the  disability,  whether  total  or 
partial,  permanent  or  temporary,  the  amount  paid  or  due  and 
unpaid  to  the  employee  up  to  the  date  of  the  release  or  agree- 
ment or  death,  as  the  case  may  be,  and,  if  any,  the  amount  of 
the  payment  or  benefits  then  or  thereafter  to  be  made,  and  the 
length  of  time  that  such  payment  is  to  continue.  In  case  of 
death  there  shall  also  be  stated  in  such  release  or  settlement 
agreement  the  date  of  death,  the  name  of  the  widow,  if  any, 
the  name  and  ages  of  all  children,  if  any,  and  the  names  of  all 
other  dependents,  if  any,  and  whether  such  dependents  be  total 
or  partial,  and  the  amount  paid  or  to  be  paid  as  a  death  benefit 
and  to  whom  such  payment  is  to  be  made. 

Sec.  33.  (a)  At  the  time  of  making  its  award  or  at  any 
time  thereafter  the  commission  on  its  own  motion,  either  with 
or  without  notice,  or  upon  application  of  either  party  with  due 
notice  to  the  other,  may  in  its  discretion,  commute  the  compen- 
sation payable  under  this  act  to  a  lump  sum,  if  it  appears  that 
such  commutation  is  necessary  for  the  protection  of  the  person 
entitled  thereto,  or  for  the  best  interest  of  either  party,  or  that 
it  will  avoid  undue  expense  or  hardship  to  either  party,  or  that 
the  employer  has  sold  or  otherwise  disposed  of  the  greater  part 
of  his  assets,  or  is  about  to  do  so,  or  that  the  employer  is  not  a 
resident  of  this  state,  and  the  commission  may  order  such  com- 
pensation paid  forthwith  or  at  some  future  time. 

(b)  The  amount  of  the  commuted  payment  shall  be  deter- 
mined in  accordance  with  the  following  provisions: 

( 1 )  If  the  accident  causes  temporary  disability,  the  commis- 
sion shall  estimate  the  probable  duration  thereof  and  the 
probable  amount  of  the  temporary  disability  indemnity  pay- 


COMPENSATION,   INSURANCE   AND   SAFETY   ACT.  195 

able  therefor  in  accordance  with  the  provisions  of  section 
fifteen  hereof  and  shall  fix  the  lump  sum  payment  at  such 
amount  so  determined. 

(2)  If  the  accident  causes  permanent  disability  or  death, 
the  commission  shall  fix  the  total  amount  of  the  permanent 
disability  indemnity  or  death  benefit  payable  therefor  in 
accordance  with  the  provisions  of  said  section  fifteen  and  shall 
estimate  the  present  value  thereof,  assuming  interest  at  the 
rate  of  six  per  cent  per  annum,  disregarding  the  probability 
of  the  beneficiary's  death  in  all  cases  except  where  the  per- 
centage of  permanent  disability  is  such  as  to  entitle  the  bene- 
ficiary to  a  life  pension,  and  then  taking  into  consideration  the 
probability  of  the  beneficiary's  death  only  in  estimating  the 
present  value  of  such  life  pension. 

(c)  The  commission  in  its  discretion  may  order  the  lump  commte- 
sum  payment,  determined  as  hereinbefore  provided,  paid  JjSJJjine 
directly  to  the  injured  employee  or  to  his  dependents,  or  depos-  recipient. 
ited  with  any  savings  bank  or  trust  company  authorized  to 
transact  business  in  this  state,  that  will  agree  to  accept  the 
same  as  a  deposit  bearing  interest  at  not  less  than  four  per 
cent,  per  annum,  or  the  commission  may  order  the  same  depos- 
ited with  the  state  compensation  insurance  fund.  Any  such 
amount  so  deposited,  together  with  all  interest  thereon,  shall 
thereafter  be  held  in  trust  for  the  injured  employee,  or  in  the 
event  of  his  death,  for  his  dependents,  who  shall  have  no  fur- 
ther  recourse  against  the  employer.  Payments  from  said  fund,  Payments 
when  so  deposited,  shall  be  made  by  the  trustee  only  in  the  gomtnwt 
same  amounts  and  at  the  same  times  as  fixed  by  the  order  of 
the  commission  and  until  said  fund  and  interest  thereon  shall 
be  exhausted.  In  the  appointment  of  the  trustee  preference 
shall  be  given,  in  the  discretion  of  the  commission,  to  the  choice 
of  the  injured  employee  or  his  dependents.  Upon  the  making 
of  such  payment,  the  employer  shall  present  to  the  commission 
a  proper  receipt  evidencing  the  same,  executed  either  by  the 
injured  employee  or  his  dependents,  or  by  the  trustee,  and  the 
commission  shall  thereupon  issue  its  certificate  in  proper  form 
evidencing  the  same,  and  such  certificate,  upon  filing  with  the 
clerk  of  the  superior  court  in  which  any  judgment  upon  an 
award  may  have  been  entered,  shall  operate  as  a  satisfaction 
of  said  award  and  shall  fully  discharge  the  employer  from 
any  further  liability  on  account  thereof. 

Insurance  Provisions. 
Sec.  34.     (a)  Nothing  in  this  act  shall  affect  the  organiza- 
tion  of  any  mutual  or  other  insurance  company,  or  any  existing  employer 
contract  for  insurance  or  the  right  of  the  employer  to  insure  t0  insure' 
in  mutual  or  other  companies,  in  whole  or  in  part,  against 
liability  for  the  compensation  provided  for  by  this  act;  or,  to 
provide  by  mutual  or  other  insurance,  or  by  arrangement  with 
his  employees,  or  otherwise,  for  the  payment  to  such  employees, 
their  families,  dependents  or  representatives,  of  sick,  accident 
or  death  benefits,  in  addition  to  the  compensation  provided  for 
by  this  act. 


196  INSURANCE   LAWS  OP   CALIFORNIA. 

insurance  (b)  Liability  for  compensation  shall  not  be  reduced  or 
employer^  affected  by  any  insurance,  contribution,  or  other  benefit  what- 
liab,e-  soever  due  to  or  received  by  the  person  entitled  to  such  com- 
pensation, except  as  otherwise  provided  by  this  act,  and  the 
person  so  entitled  shall,  irrespective  of  any  insurance  or  other 
contract,  except  as  otherwise  provided  in  this  act,  have  the 
right  to  recover  such  compensation  directly  from  the  employer, 
and  in  addition  thereto,  the  right  to  enforce  in  his  own  name, 
in  the  manner  provided  in  this  act,  either  by  making  the  insur- 
ance carrier  a  party  to  the  original  application  or  by  filing  a 
separate  application,  the  liability  of  any  insurance  carrier, 
which  may,  in  whole  or  in  part,  have  insured  against  liability 
for  such  compensation ;  provided,  however,  that  payment  in 
whole  or  in  part  of  such  compensation  by  either  the  employer 
or  the  insurance  company  shall,  to  the  extent  thereof,  be  a  bar 
to  recovery  against  the  other  of  the  amount  so  paid;  and  pro- 
vided, further,  that  as  between  the  employer  and  the  insurance 
company,  payment  by  either  directly  to  the  employee,  or  to 
the  person  entitled  to  compensation,  shall  be  subject  to  the  con- 
ditions of  the  insurance  contract  between  them. 
Bothn  (c)   Every  contract  insuring  against  liability  for  compensa- 

bound.       tion,  or  insurance  policy  evidencing  the  same,  must  contain  a 
clause  to  the  effect  that  the  insurance  carrier  shall  be  directly 
and  primarily  liable  to  the  employee  and,  in  the  event  of  his 
death,  to  his  dependents,  to  pay  the  compensation,  if  any,  for 
which  the  employer  is  liable;  that,  as  between  the  employee 
and  the  insurance  carrier,  the  notice  to  or  knowledge  of  the 
occurrence  of  the  injury  on  the  part  of  the  employer  shall  be 
deemed  notice  or  knowledge,  as  the  case  may  be,  on  the  part  of 
the  insurance  carrier;  that  jurisdiction  of  the  employer  shall, 
for  the  purpose  of  this  act,  be  jurisdiction  of  the  insurance 
carrier  and  that  the  insurance  carrier  shall  in  all  things  be 
bound  by  and  subject  to  the  orders,  findings,   decisions  or 
awards  rendered  against  the  employer  under  the  provisions 
of  this  act. 
insolvency       (d)  Such  policy  must  also  provide  that  the  employee  shall 
employer     have  a  first  lien  upon  any  amount  which  shall  become  owing 
insurance    on  account  of  such  policy  to  the  employer  from  the  insurance 
carrier        carrier  and  that  in  case  of  the  legal  incapacity  or  inability  of 
the  employer  to  receive  the  said  amount  and  pay  it  over  to  the 
employee  or  his  dependents,  the  said  insurance  carrier  may  and 
shall  pay  the  same  directly  to  the  said  employee  or  his  depend- 
ents, thereby  discharging  to  the  extent  of  such  payment  the 
obligations  of  the  employer  to  the  employee,  and  such  policy 
shall  not  contain  any  provisions  relieving  the  insurance  carrier 
from   payment   when  the   employer  becomes  insolvent  or  is 
discharged  in  bankruptcy,  or  otherwise,  during  the  period  that 
insurance    *ne  P°licv  *s  ^n  operation  or  the  compensation  remains  owing. 
carrier  (e)   1.  If  the  employer  shall  be  insured  against  liability  for 

substituted  compensation  with  any  insurance  carrier,  and  if  after  the  hap- 
Jmpioyer.    Penni&  of  any  accident  such  insurance  carrier  shall  serve  or 


insurance 
carrier. 


COMPENSATION,   INSURANCE   AND   SAFETY   ACT.  197 

cause  to  be  served  upon  any  person  claiming  compensation 
against  such  employer  a  notice  that  it  has  assumed  and  agreed 
to  pay  the  compensation,  if  any,  for  which  the  employer  is  '  • 
liable,  and  shall  file  a  copy  of  such  notice  with  the  commission, 
sucli  employer  shall  thereupon  be  relieved  from  liability  for 
compensation  to  such  claimant  and  the  insurance  carrier  shall, 
without  notice,  be  substituted  in  place  of  the  employer  in  any 
proceeding  theretofore  or  thereafter  instituted  by  such  person 
to  recover  such  compensation,  and  the  employer  shall  be  dis- 
missed therefrom.  Such  proceeding  shall  not  abate  on  account 
of  such  substitution  but  shall  be  continued  against  such  insur- 
ance carrier. 

2.  If  at  the  time  of  the  happening  of  an  accident  for  which  ^JjJjyjJ 
compensation  is  claimed,  or  may  be  claimed,  the  employer  shall  <>J  liability 
be  insured  against  liability  for  the  full  amount  of  compensa- 
tion payable,  or  that  may  become  payable,  the  employer  may 
serve  or  cause  to  be  served  upon  any  person  claiming  compen- 
sation on  account  of  the  happening  of  such  accident  and  upon 
the  insurance  carrier  a  notice  that  the  insurance  carrier  has,  in 
its  policy  contract  or  otherwise,  assumed  and  agreed  to  pay  the 
compensation,  if  any,  for  which  the  employer  is  liable,  and 
may  file  a  copy  of  such  notice  with  the  commission.  If  it  shall 
thereafter  appear  to  the  satisfaction  of  the  commission  that  the 
insurance  carrier  has,  through  the  issuance  of  its  contract  of 
insurance  or  otherwise,  assumed  such  liability  for  compensa- 
tion, such  employer  shall  thereupon  be  relieved  from  liability 
for  compensation  to  such  claimant  and  the  insurance  carrier 
shall,  after  notice,  be  substituted  in  place  of  the  employer  in 
any  proceeding  theretofore  or  thereafter  instituted  by  such 
person  to  recover  such  compensation,  and  the  employer  shall  be 
dismissed  therefrom.  Such  proceeding  shall  not  abate  on 
account  of  such  substitution,  but  shall  be  continued  against 
such  insurance  carrier. 

(/)   Where   any   employer   is   insured   against   liability   for  ^rl£r",r 
compensation  with  any  insurance  carrier  and  such  insurance  subrogated 
carrier    shall    have    paid    any    compensation    for    which    the  employer's 
employer  was   liable,   or  shall  have  assumed  the  liability  of  r,ghts- 
the  employer  therefor,  it  shall  be  subrogated  to  all  the  rights 
and  duties  of  the  employer  and  may  enforce  any  such  rights 
in  its  own  name. 

Sec.  35.     (a)   If  any  insurance  policy  shall  be  issued  cover-  JJjJJ^, 
ing  liability  for  compensation,  which  policy  shall  contain  any  be  plainly 
limitation    as   to   the   compensation    payable,    such   limitation ev 
shall  be  printed  in  the  body  of  such  policy  in  boldface  type 
and    in    addition    thereto    the    words    "  limited    compensation 
policy"  shall  be  printed  on  the  top  of  the  policy  in  bold-faced 
type  not  less  than  eighteen  point  in  size. 

(b)   No  insurance  carrier  shall  insure  against  the  liability  £,"„,..„„.,, 
of  the  employer  for  damages  recoverable  at  law  by  the  injured  against 
employee  under  the  optional   provisions  contained  in  section  f0rWlIty 
twelve  hereof,  and  any  insurance  carrier  liable  to  any  such  dama«,s 


198 


INSURANCE   LAWS   OF   CALIFORNIA. 


Creation 
of  the 
fund. 


Its 
purpose. 


Nature  of 
the  fund. 


Charges 
against 
fund. 


Self-sup- 
porting. 


Adminis- 
tered by 

Com- 
mission. 


injured  employee  for  compensation  upon  the  payment  of  the 
same  shall  have  the  same  option  given  by  said  section  twelve  to 
such  employee  and  shall  be  fully  subrogated  to  his  rights,  and 
may  enforce  such  liability  for  damages  against  the  employer  in 
its  own  name,  anything  in  the  insurance  contract  to  the  con- 
trary notwithstanding. 

An  insurance  carrier  can  not  agree  to  defend  nor  to  indemnify  the 
employer  against  the  costs  and  expenses  of  defending  actions  for  damages 
brought  under  the  optional  provisions  of  section  12  of  this  act :  Opinion  of 
Insurance  Commissioner,  December  9,  1918. 

State  Compensation  Insurance  Fund. 

Sec.  36.  There  is  hereby  created  and  established  a  fund  to 
be  known  as  the  ' 'state  compensation  insurance  fund,"  to  be 
administered  by  the  industrial  accident  commission  of  the 
state,  without  liability  on  the  part  of  the  state  beyond  the 
amount  of  said  fund,  for  the  purpose  of  insuring  employers 
against  liability  for  compensation  under  this  act  and  insuring 
to  employees  and  other  persons  the  compensation  fixed  by  this 
act  for  employees  and  their  dependents. 

Sec.  37.  (a)  The  state  compensation  insurance  fund  shall 
be  a  revolving  fund  and  shall  consist  of  such  specific  appro- 
priations as  the  legislature  may  from  time  to  time  make  or  set 
aside  for  the  use  of  such  fund,  all  premiums  received  and  paid 
into  the  said  fund  for  compensation  insurance  issued,  all  prop- 
erty and  securities  acquired  by  and  through  the  use  of  moneys 
belonging  to  said  fund  and  all  interest  earned  upon  moneys 
belonging  to  said  fund  and  deposited  or  invested,  as  herein 
provided. 

(b)  Said  fund  shall  be  applicable  to  the  payment  of  losses 
sustained  on  account  of  insurance  and  to  the  payment  of  the 
salaries  and  other  expenses  to  be  charged  against  said  fund  in 
accordance  with  the  provisions  contained  in  this  act. 

(e)  Said  fund  shall,  after  a  reasonable  time  during  which 
it  may  establish  a  business,  be  fairly  competitive  with  other 
insurance  carriers,  and  it  is  the  intent  of  the  legislature  that 
said  fund  shall  ultimately  become  neither  more  nor  less  than 
self-supporting. 

Sec.  38.  (a)  The  commission  is  hereby  vested  with  full 
power,  authority  and  jurisdiction  over  the  state  compensation 
insurance  fund  and  may  do  and  perform  any  and  all  things 
whether  herein  specifically  designated,  or  in  addition  thereto, 
which  are  necessary  or  convenient  in  the  exercise  of  any  power, 
authority  or  jurisdiction  over  said  fund  in  the  administration 
thereof,  or  in  connection  with  the  insurance  business  to  be 
carried  on  by  it  under  the  provisions  of  this  act,  as  fully  and 
completely  as  the  governing  body  of  a  private  insurance 
carrier  might  or  could  do. 


COMPENSATION,   INSURANCE   AND   SAFETY  ACT.  199 

(b)  The  commission  shall  have  full  power  and  authority,  Jf°S's 
and  it  shall  be  its  duty,  to  fix  and  determine  the  rates  to  be  oommis- 
charged  by  the  state  compensation  insurance  fund  for  com-  connection 
pensation  insurance,  and  to  manage  and  conduct  all  business  TamSll 
and  affairs  in  relation  thereto,  all  of  which  business  and  affairs  lf^°en 
shall  be  conducted  in  the  name  of  the  state  compensation  insur-  fund. 
anee  fund,  and  in  that  name,  without  any  other  name  or  title, 

the  commission  may: 

(1)  Sue  and  be  sued  in  all  the  courts  of  the  state  in  all 
actions  arising  out  of  any  act,  deed,  matter  or  thing  made, 
omitted,  entered  into,  done,  or  suffered  in  connection  with  the 
slate  compensation  insurance  fund,  the  administration,  man- 
agement or  conduct  of  the  business  or  affairs  relating' thereto. 

(2)  Make  and  enter  into  contracts  of  insurance  as  herein 
provided,  and  such  other  contracts  or  obligations  relating  to 
the  state  compensation  insurance  fund  as  are  authorized  or 
permitted  under  the  provisions  of  this  act. 

(3)  Invest  and  reinvest  the  moneys  belonging  to  said  fund 
as  hereinafter  provided. 

(4)  Conduct  all  business  and  affairs,  relating  to  the  state 
compensation  insurance  fund,  whether  herein  specifically  desig- 
nated or  in  addition  thereto. 

(c)  The  commission  may  delegate  to  the  manager  of  the  Delegation 
state  compensation  insurance  fund,  or  to  any  other  officer,  ofpowns- 
under  such  rules  and  regulations  and  subject  to  such  condi- 
tions as  it  may  from  time  to  time  prescribe,  any  of  the  powers, 
functions  or  duties,  conferred  or  imposed  on  the  commission 
under  the  provisions  of  this  act  in  connection  with  the  state 
compensation  insurance  fund,  the  administration,  manage- 
ment and  conduct  of  the  business  and  affairs  relating  thereto, 

and  the  officer  or  officers  to  whom  such  delegation  is  made  may 
exercise  the  powers  and  functions  and  perform  the  duties  dele- 
gated with  the  same  force  and  effect  as  the  commission,  but 
subject  to  its  approval. 

(d)  The  commission  shall  not,  nor  shall  any  commissioner,  ^JJJ1^ 
officer  or  employee  thereof,  be  personally  liable  in  his  private  personally 
capacity  for  or  on  account  of  any  act  performed  or  contract liable- 

or  other  obligation  entered  into  or  undertaken  in  an  official 
capacity,  in  good  faith  and  without  intent  to  defraud,  in  con- 
nection .with  the  administration,  management  or  conduct  of 
the  state  compensation  insurance  fund,  its  business  or  other 
affairs  relating  thereto. 

Sec.  39.     In  conducting  the  business  and  affairs  of  the  state  powers 
compensation  insurance  fund,  the  manager  of  the  said  fund  or  JJ  ^J1*1®8 
other  officer  to  whom  such  power  and  authority  may  be  dele-  ™atnhager 
gated  by  the  commission,  as  provided  by  subsection  (c)    of  sec-  fund. 
fcion  thirty-eight  thereof,  shall  have  full  power  and  authority: 

(1)  To  enter  into  contracts  of  insurance,  insuring  employers 
against  liability  for  compensation  and  insuring  to  employees 
and  other  persons  the  compensation  fixed  by  this  act. 

(2)  To  sell  annuities  covering  compensation  benefits. 


200  INSURANCE   LAWS  OF   CALIFORNIA. 

(3)  To  decline  to  insure  any  risk  in  which  the  minimum 
requirements  of  the  commission  with  regard  to  construction, 
equipment  and  operation  are  not  observed,  or  which  is  beyond 
the  safe  carrying  of  the  state  compensation  insurance  fund, 
but  shall  not  have  power  or  authority,  except  as  otherwise  pro- 
vided in  this  subdivision,  to  refuse  to  insure  any  compensation 
risk  tendered  with  the  premium  therefor. 

(4)  To  reinsure  any  risk  or  any  part  thereof. 

.  (5)  To  inspect  and  audit,  or  cause  to  be  inspected  and 
audited  the  pay  rolls  of  employers  applying  for  insurance 
against  liability  for  compensation. 

(6)  To  make  rules  and'  regulations  for  the  settlement  of 
claims  against  said  fund  and  to  determine  to  whom  and 
through  whom  the  payments  of  compensation  are  to  be  made. 

(7)  To  contract  with  physicians,  surgeons  and  hospitals  for 
medical  and  surgical  treatment  and  the  care  and  nursing  of 
injured  persons  entitled  to  benefits  from  said  fund. 

Rates.  Sec    40      (a)   It  ghall  be  the  duty  of  the  commission  t0  nx 

and  determine  the  rates  to  be  charged  by  the  state  compensa- 
tion insurance  fund  for  compensation  insurance  coverage  as 
herein  provided,  and  such  rates  shall  be  fixed  with  due  regard 
to  the  physical  hazards  of  each  industry,  occupation  or  employ- 
ment and,  within  each  class,  so  far  as  practicable,  in  accord- 
ance with  the  elements  of  bodily  risk  or  safety  or  other  hazard 
of  the  plant  or  premises  or  work  of  each  insured  and  the  man- 
ner in  which  the  same  is  conducted,  together  with  a  reasonable 
regard  for  the  accident  experience  and  history  of  each  such 
insured,  and  the  means  and  methods  of  caring  for  injured  per- 
sons, but  such  rates  shall  take  no  account  of  the  extent  to 
which  the  employees  in  any  particular  establishment  have  or 
have  not  persons  dependent  upon  them  for  support. 
whteh  rates  W  The  rates  s0  mac^e  snall  be  that  percentage  of  the  pay 
are  to  be  roll  of  any  employer  which,  in  the  long  run  and  on  the  aver- 
age, shall  produce  a  sufficient  sum,  when  invested  at  three  and 
one  half  per  cent  interest : 

(1)  To  carry  all  claims  to  maturity;  that  is  to  say  the  rates 
shall  be  based  upon  the  "reserve"  and  not  upon  the  "assess- 
ment" plan; 

(2)  To  meet  the  reasonable  expenses  of  conducting  the  busi- 
ness of  such  insurance; 

(3)  To  produce  a  reasonable  surplus  to  cover  the  catastrophe 
hazard. 

character  Sec.  41.  The  insurance  contracts  entered  into  between  the 
policy  to  state  compensation  insurance  fund  and  persons  insuring  there- 
be  issued.  wjtn  may  De  either  limited  or  unlimited  and  issued  for  one 
year  or,  in  the  form  of  stamps  or  tickets  or  otherwise,  for  one 
month  or  any  number  of  months  less  than  one  year,  or  for  one 
day  or  any  number  of  days  less  than  one  month,  or  during  the 
performance  of  any  particular  work,  job  or  contract;  pro- 
vided, that  the  rates  charged  shall  be  proportionately  greater 
for  a  shorter  than  for  a  longer  period  and  that  a  minimum 


COMPENSATION,    INSURANCE   AND    SAFETY    ACT.  201 

premium  charge  shall  be  fixed  in  accordance  with  a  reasonable 
rate  for  insuring  one  person  for  one  day.  Nothing  in  this 
act  shall  be  construed  to  prevent  any  person  applying  for  com- 
pensation insurance  from  being  covered  temporarily  until  the 
application  is  finally  acted  upon,  or  to  prevent  the  insured 
from  surrendering  any  policy  at  any  time  and  having  returned 
to  him  the  difference  between  the  premium  paid  and  the 
premium  at  the  customary  short  term  for  the  shorter  period 
which  such  policy  lias  already  run.  The  state  compensation 
insurance  fund  may  at  any  time  cancel  any  policy,  after  due 
notice,  upon  a  pro  rata  basis  of  premium  repayment. 

Sec.  42.     The  state  compensation  insurance  fund  may  issue  seif-em- 
polieies.  including  with  their  employees,  employers  who  per-  Jn/cwuaJ 
form  labor  incidental  to  their  occupations,  and  including  also  emPloyees- 
members  of  the  families  of  such  employers  engaged  in  the  same 
occupation,  such  policies  insuring  to  such  employers  and  work- 
ing  members  of  their  families  the  same  compensations  provided 
for  their  employees,  and  at  the  same  rates;  provided,  that  the 
estimations  of  their  wage  values,  respectively,  shall  be  reason- 
able and  separately  stated  in  and  added  to  the  valuation  of 
their  pay  rolls  upon  which  their  premium  is  computed.     Such 
policies  may  likewise  be  sold  to  self -employing  persons  and  to 
casual  employees,  who,  for  the  purpose  of  such  insurance,  shall 
be  deemed  to  be  employees  within  the  meaning  of  sections 
twelve  to  thirty-five,  inclusive,  of  this  act. 

Si:c.  43.  The  treasurer  of  the  state  shall  be  custodian  of  all  ^uuS" 
moneys  and  securities  belonging  to  the  state  compensation 
insurance  fund,  except  as  otherwise  provided  in  this  act,  and 
shall  be  liable  on  his  official  bond  for  the  safe-keeping  thereof. 
All  moneys  belonging  to  said  fund  collected  or  received  by  the 
commission,  or  the  manager  of  the  state  compensation  insur- 
ance fund,  under  and  by  virtue  of  the  provisions  of  this  act, 
shall  be  delivered  to  the  treasurer  of  the  state  or  may  be 
deposited  to  his  credit  in  such  bank  or  banks  throughout  the 
state  ;is  he  may,  from  time  to  time,  designate,  and  such  moneys 
when  so  delivered  or  deposited  shall  be  credited  by  the  treas- 
urer to  the  said  fund  and  no  moneys  received  or  collected  on 
account  of  such  fund  shall  be  expended  or  paid  out  of  such 
fund  without  first  passing  into  the  state  treasury  and  being 
drawn  therefrom  as  provided  in  this  act.  In  like  manner  there 
shall  be  delivered  to  the  treasurer  all  securities  belonging  to 
said  fund  which  shall  be  held  by  him  until  otherwise  disposed 
of  as  provided  in  this  act. 

Sec.  44.  (a)  The  commission  shall  submit  each  month  to  ^ount" 
the  state  board  of  control  an  estimate  of  the  amount  necessary 
to  meet  the  current  disbursements  from  the  state  compensation 
insurance  fund  during  each  succeeding  calendar  month  and, 
when  such  estimate  shall  be  approved  by  the  state  board  of 
control,  the  controller  is  directed  to  draw  his  warrant  on  said 
fund  in  favor  of  said  commission  for  such  amount,  and  the 
treasurer  is  authorized  and  directed  to  pay  the  same. 


202 


INSURANCE   LAWS  OF   CALIFORNIA. 


Semi- 
annual 
valuation 
of  prop- 
erties. 


Investment 
of  surplus. 


Insurance 

of  public 
corpora- 
tions. 


Public 
officials 
to  act  as 
agents. 


(b)  At  the  end  of  each  calendar  month  the  commission  shall 
account  to  the  state  board  of  control  and  the  state  controller 
for  all  moneys  so  received,  furnishing  proper  vouchers  therefor. 

(c)  During  the  months  of  January  and  of  July  of  each  year 
the  state  board  of  control  or  the  commission  shall  cause  a  valu- 
ation to  be  made  of  the  properties  and  securities  which  have 
been  acquired  and  which  are  held  for  said  fund,  and  shall 
report  the  results  of  the  same  to  the  state  controller,  whose  duty 
it  shall  be  to  keep  a  special  ledger  account  showing  all  of  the 
assets  pertaining  to  the  state  compensation  insurance  fund.  In 
the  controller 's  general  ledger  this  fund  account  may  be  carried 
merely  as  a  cash  account,  like  other  accounts  of  funds  in  the 
state  treasury,  and  therein  only  the  actual  cash  coming  into  the 
state  compensation  insurance  fund  shall  be  credited  to  such 
fund. 

Sec.  45.  (a)  The  commission  shall  cause  all  moneys  in  the 
state  compensation  insurance  fund,  in  excess  of  current  require- 
ments, to  be  invested  and  reinvested,  from  time  to  time,  in  the 
securities  now  or  hereafter  authorized  by  law  for  the  invest- 
ment of  funds  of  savings  banks. 

(6)  The  commission  shall,  from  time  to  time,  submit  to  the 
state  board  of  control  an  estimate  of  the  amount  required  by 
it  for  investment,  which  estimate  shall  be  accompanied  by  a 
full  description  of  the  kind  and  character  of  the  investments 
to  be  made  and,  when  such  estimate  shall  be  approved  by  the 
state  board  of  control,  the  controller  is  directed  to  draw  his 
warrant  on  the  state  compensation  insurance  fund  in  favor  of 
the  commission  for  such  amount  and  the  treasurer  is  authorized 
and  directed  to  pay  the  same. 

(c)  At  the  end  of  each  calendar  month  the  commission  shall 
account  to  the  said  board  of  control  and  the  state  controller 
for  all  moneys  so  received,  furnishing  proper  vouchers  therefor. 

(d)  All  moneys  in  said  fund,  in  excess  of  current  require- 
ments and  not  otherwise  invested,  may  be  deposited  by  the 
state  treasurer  from  time  to  time  in  the  banks  authorized  by 
law  to  receive  deposits  of  public  moneys  under  the  same  rules 
and  regulations  that  govern  the  deposit  of  other  public  funds 
and  the  interest  accruing  thereon  shall  be  credited  to  the  state 
compensation  insurance  fund. 

Sec.  46.  Each  county,  city  and  county,  city,  school  district 
or  other  public  corporation  within  the  state,  may  insure  against 
its  liability  for  compensation,  with  the  state  compensation  insur- 
ance fund  and  not  with  any  other  insurance  carrier  unless  such 
fund  shall  refuse  to  accept  the  risk  when  the  application  for 
insurance  is  made,  and  the  premium  therefor  shall  be  a  proper 
charge  against  the  general  fund  of  each  such  political  sub- 
division of  the  state. 

Sec.  47.  When  the  premium  rates  for  insurance  in  the 
state  compensation  insurance  fund  shall  have  been  established 
the  commission  shall  furnish  schedules  of  rates  and  copies  of 
the  forms  of  policy  to  the  commissioner  of  labor,  to  the  clerk 


COMPENSATION,   INSURANCE   AND   SAFETY  ACT.  203 

and  to  the  treasurer  of  every  county,  city  and  county,  and  city 
in  the  state,  and  it  shall  be  the  duty  of  every  public  officer 
to  whom  the  foregoing  may  be  furnished  to  fill  out  and  trans- 
mit to  the  manager  of  the  state  compensation  insurance  fund 
applications  for  compensation  insurance  in  such  fund  and  to 
receive  and  transmit  to  said  manager  all  premiums  paid  on 
account  of  any  policy  issued  or  applied  for. 

Sec  48.  The  commission  shall  each  quarter  make  to  the  Quarterly 
governor  of  the  state,  reports  of  the  business  done  by  the  state 
compensation  insurance  fund  during  the  previous  quarter,  and 
a  statement  of  the  fund's  resources  and  liabilities,  and  it  shall 
be  the  duty  of  the  state  board  of  control  to  audit  such  reports 
and  to  cause  an  abstract  thereof  to  be  published  one  or  more 
times  in  at  least  two  newspapers  of  general  circulation  in  the 
state.  The  commission  shall  likewise  make  to  the  state  insur- 
ance commissioner  all  reports  required  by  law  to  be  made  by 
other  insurance  carriers. 

Sec.  49.     Any  employer  who  shall  wilfully  misrepresent  the  ^Jjg 
amount  of  the  pay  roll  upon  which  his  premium  under  this  act  representa- 
is  to  be  based  shall  be  liable  to  the  state  in  ten  times  the  amount tion- 
of  the  difference  in  premium  paid  and  the  amount  the  employer 
should  have  paid  had  his  pay  roll  been  correctly  computed,  and 
the  liability  to  the  state  under  this  section  shall  be  enforced  in 
a  civil' action  in  the  name  of  the  state  compensation  insurance 
fund  and  any  amount  so  collected  shall  become  a  part  of  said 
fund. 

Sec.  50.  Any  person  who  wilfully  misrepresents  any  fact 
in  order  to  obtain  insurance  at  less  than  the  proper  rate  for 
such  insurance,  or  in  order  to  obtain  any  payments  out  of  such 
fund,  shall  be  guilty  of  a  misdemeanor. 

Safety  Provisions. 
Sec.  51.     The  following  terms,  as  used  in  sections  fifty-one  TjgJjV 
to  seventy-two,  inclusive,  of  this  act,  shall,  unless  a  different 
meaning  is  plainly  required  by  the  context,  be  construed  as 
follows : 

(1)  The  phrase   "place  of   employment"  shall  mean  and  employ-0  f 
include  every  place,  whether  indoors  or  out  or  underground,  ment." 
or  elsewhere,  and  the  premises  appurtenant  thereto,  where, 
either  temporarily  or  permanently,  any  industry,  trade,  work 

or  business  is  carried  on,  or  where  any  process  or  operation 
directly  or  indirectly  related  to  any  industry,  trade,  work  or 
business,  is  carried  on,  and  where  any  person  is  directly  or 
indirectly  employed  by  another  for  direct  or  indirect  gain  or 
profit,  but  shall  not  include  any  place  where  persons  are 
employed  solely  in  farm,  dairy,  agricultural,  viticultural  or 
horticultural  labor,  in  stock  or  poultry  raising  or  in  household 
domestic  service. 

(2)  The  term  "employment"  shall  mean  and  include  any  "Employ- 
trade,  work,  business,  occupation  or  process  of  manufacture,  or  ment." 
any  method  of  carrying  on  such  trade,  work,  business,  occupa- 
tion or  process  of  manufacture  in  which  any  person  may  be 


"Genera] 

order." 


204  INSURANCE   LAWS  OP   CALIFORNIA. 

engaged,  except  where  persons  are  employed  solely  in  farm, 
dairy,  agricultural,  viticultural  or  horticultural  labor,  in  poul- 
try or  stock  raising  or  in  household  domestic  services. 
"Km-  (3)   The  term  "employer"  shall  mean  and  include  every 

person,  firm,  voluntary  association,  corporation,  officer,  agent, 
manager,  representative  or  other  person  having  control  or  cus- 
tody of  any   employment,   place   of   employment   or   of  any 
employee. 
pioyee."  W   The  term  "employee"  shall  mean  and  include  every 

person  who  may  be  required  or  directed  by  any  employer,  in 
consideration  of  direct  or  indirect  gain  or  profit,  to  engage  in 
any  employment,  or  to  go  to  work  or  be  at  any  time  in  any 
place  of  employment. 
"Order."  (5)  The  term  "order"  shall  mean  and  include  any  decision, 
rule,  regulation,  direction,  requirement  or  standard  of  the 
commission  or  any  other  determination  arrived  at  or  decision 
made  by  such  commission  under  the  safety  provisions  of  this 
act. 

(6)  The  term  "general  order"  shall  mean  and  include  such 
order  made,  under  the  safety  provisions  of  this  act,  as  applies 
generally  throughout  the  state  to  all  persons,  employments  or 
places  of  employment,  or  all  persons,  employments  or  places  of 
employment  of  a  class  under  the  jurisdiction  of  the  commis- 
sion. All  other  orders  of  the  commission  shall  be  considered 
special  orders, 
order/'  (?)   The  term  "local  order"  shall  mean  and  include  any 

ordinance,  order,  rule  or  determination  of  any  board  of  super- 
visors, city  council,  board  of  trustees  or  other  governing  body 
of  any  county,  city  and  county,  city  or  of  any  school  district 
or  other  public  corporation,  or  an  order  or  direction  of  any 
other  public  official  or  board  or  department  upon  any  matter 
over  which  the  industrial  accident  commission  has  jurisdiction. 
''safety."        W   The  terms  "safe"  and  "safety"  as  applied  to  an  em- 
ployment or  a  place  of  employment  shall  mean  such  freedom 
from  danger  to  the  life  or  safety  of  employees  as  the  nature  of 
the  employment  will  reasonably  permit. 
"Safcty,,         (9)   The  terms  "safety  device"  and  "safeguard"  shall  be 
"Safe-'t      given  a  broad  interpretation  so  as  to  include  any  practicable 
guards."     method  of  mitigating  or  preventing  a  specific  danger. 
Employ-         Sec.  52.     Every  employer  shall  furnish  employment  which 
be  reason-   shall  be  safe  for  the  employees  therein  and  shall  furnish  a 
ably  safe.    p]ace  0f  employment  which  shall  be  safe  for  employees  therein, 
and  shall  furnish  and  use  such  safety  devices  and  safeguards, 
and  shall  adopt  and  use  such  practices,  means,  methods,  opera- 
tions and  processes  as  are  reasonably  adequate  to  render  such 
employment  and  place  of  employment  safe,  and  shall  do  every 
other  thing  reasonably  necessary  to  protect  the  life  and  safety 
of  such  employees, 
safety  Sec.  53.     No  employer  shall  require,  permit  or  suffer  any 

employee  to  go  or  be  in  any  employment  or  place  of  employ- 
ment which  is  not  safe,  and  no  such  employer  shall  fail  to  fur- 
nish, provide  and  use  safety  devices  and  safeguards  or  fail  to 


COMPENSATION,   INSURANCE   AND   SAFETY   ACT.  205 

adopt  and  use  methods  and  processes  reasonably  adequate  to 
render  such  employment  and  place  of  employment  safe,  and 
no  such  employer  shall  fail  or  neglect  to  do  every  other  thing 
reasonably  necessary  to  protect  the  life  and  safety  of  such 
employees,  and  no  such  employer  shall  occupy  or  maintain  any 
place  of  employment  that  is  not  safe. 

Sec.  54.     No  employer,  owner  or  lessee  of  any  real  property  unsafe 
in  this  state  shall  construct  or  cause  to  be  constructed  any  B 
place  of  employment  that  is  not  safe. 

Sec.  55.     No  employee  shall  remove,  displace,  damage,  de-  interfer- 
stroy  or  carry  off  any  safety  device  or  safeguard  furnished  l&°tlty 
and  provided  for  use  in  any  employment  or  place  of  employ-  devi(,s 
ment,  or  interfere  in  any  way  with  the  use  thereof  by  any 
other  person,  or  interfere  with  the  use  of  any  method  or  pro- 
cess adopted  for  the  protection  of  any  employee  in  such  em- 
ployment, or  place  of  employment,  or  fail  or  neglect  to  do 
every  other  thing  reasonably  necessary  to  protect  the  life  and 
safety  of  such  employees. 

Seo.  56.     The  commission  is  vested  with  full  power  and  P°wfrsof 
jurisdiction  over,  and  shall  have  such  supervision  of,  every  mission  in 
employment  and  place  of  employmnt  in  this  state  as  may  be  JJjJJ66*1011 
necessary  adequately  to  enforce  andadminister  all  laws  and  all  safety 
law  l'ul  orders  requiring  such  employment  and  place  of  employ- 
ment to  be  safe,  and  requiring  the  protection  of  the  life  and 
safety  of  every  employee  in  such  employment  or  place  of 
employment. 

Sec.  57.  The  commission  shall  have  power,  after  a  hearing 
had  upon  its  own  motion  or  upon  complaint,  by  general  or 
special  orders,  rules  or  regulations,  or  otherwise: 

(1)  To  declare  and  prescribe  what  safety  devices,  safeguards  ga*gj 
oi  Other  means  or  methods  of  protection  are  well  adapted  to  <(X1(,S 
render  the  employees  of  every  employment  and  place  of  em- 
ployment safe  as  required  by  law  or  lawful  order. 

(2)  To   fix   such   reasonable   standards   and   to   prescribe,  safety 
modify  and  enforce  such  reasonable  orders  for  the  adoption,  rtftn  .**  J 
installation,  use,  maintenance  and  operation  of  safety  devices, 
safeguards  and  other  means  or  methods  of  protection,  to  be  as 
nearly  uniform  as  possible,  as  may  be  necessary  to  carry  out 

all  laws  and  lawful  orders  relative  to  the  protection  of  the  life 
and  safety  of  employees  in  employments  and  places  of  employ- 
ment. 

(3)  To  fix  and  order  such  reasonable  standards  for  the  standards 
construction,  repair  and  maintenance  of  places  of  employment  ^'ruction, 
as  shall  render  them  safe. 

(4)  To  require  the  performance  of  any  other  act  which  the  Protection 
protection  of  the  life  and  safety  of  employees  in  employments  °  * fe' 
and  places  of  employment  may  demand. 

(5)  To  declare  and  prescribe  the  general  form  of  industrial  Reporting 
accidents  reports,  the  accidents  to  be  reported  and  the  inf orma-  dents0. 
tion  to  be  furnished  in  connection  therewith,   and  the  time 
within  which  such  reports  shall  be  filed.     Nothing  in  this  act 
contained  shall  be  construed  to  prevent  the  commission  from 
requiring  supplemental  accident  reports. 


206  INSURANCE  LAWS   OF   CALIFORNIA. 

Public  Sec.  58.     Upon  the  fixing  of  a  time  and  place  for  the  hold- 

<masraf?ty    ing  of  a  hearing  for  the  purpose  of  considering  and  issuing  a 
orders.       general  safety  order  or  orders  as  authorized  by  section  fifty- 
seven  hereof,  the  commission  shall  cause  a  notice  of  such  hear- 
ing to  be  published  in  one  or  more  daily  newspapers  of  general 
circulation  published  and  circulated  in  the  city  and  county  of 
San  Francisco,  and  also  in  one  or  more  daily  newspapers  of 
general  circulation  published  and  circulated  in  the  county  of 
Los  Angeles,  such  newspapers  to  be  designated  by  the  commis- 
sion for  that  purpose.    No  defect  or  inaccuracy  in  such  notice 
or  in  the  publication  thereof  shall  invalidate  any  general  order 
issued  by  the  commission  after  hearing  had. 
May  order       Sec.  59.     Whenever  the  commission,   after  a  hearing  had 
Stand    upon  its  own  motion  or  upon  complaint,  shall  find  that  any 
employ^     employment  or  place  of  employment  is  not  safe  or  that  the 
ment  made  practices  or  means  or  methods  or  operations  or  processes  em- 
ployed or  used  in  connection  therewith  are  unsafe,  or  do  not 
afford  adequate  protection  to  the  life  and  safety  of  employees 
in  such  employments  and  places  of  employment,  the  commis- 
sion shall  make  and  enter  and  serve  such  order  relative  thereto 
as  may  be  necessary  to  render  such  employment  or  place*  of 
employment  safe  and  protect  the  life  and  safety  of  employees 
in  such  employments  and  places  of  employment  and  may  in 
said  order  direct  that  such  additions,  repairs,  improvements  or 
changes  be  made  and  such  safety  devices  and  safeguards  be 
furnished,  provided  and  used,  as  are  reasonably  required  to 
render  such  employment  or  place  of  employment  safe,  in  the 
manner  and  within  the  time  specified  in  said  order. 
stay  of  Sec.  60.     The   commission  may,   upon   application   of  any 

employer,  or  other  person  affected  thereby,  grant  such  time 
as  may  reasonably  be  necessary  for  compliance  with  any  order, 
and  any  person  affected  by  such  order  may  petition  the  com- 
mission for  an  extension  of  time,  which  the  commission  shall 
grant  if  it  finds  such  an  extension  of  time  necessary. 
Ojger  Sec.  61.     Whenever  the  commission  shall  learn  or  have  rea- 

hearing.  son  to  believe  that  any  employment  or  place  of  employment 
is  not  safe  or  is  injurious  to  the  welfare  of  any  employee  it 
may,  of  its  own  motion,  or  upon  complaint,  summarily  inves- 
tigate the  same,  with  or  without  notice  or  hearings,  and  after 
a  hearing  upon  such  notice  as  it  may  prescribe,  the  commission 
may  enter  and  serve  such  order  as  may  be  necessary  relative 
thereto,  anything  in  this  act  to  the  contrary  notwithstanding, 
orders  Sec.  62.     Every  employer,  employee  and  other  person  shall 

obeyed6  0Dev  and  comply  with  each  and  every  requirement  of  every 
order,  decision,  direction,  rule  or  regulation  made  or  pre- 
scribed by  the  commission  in  connection  with  the  matters 
herein  specified,  or  in  any  way  relating  to  or  affecting  safety 
of  employments  or  places  of  employment,  or  to  protect  the  life 
and  safety  of  employees  in  such  employments  or  places  of 
employment,  and  shall  do  everything  necessary  or  proper  in 
order  to  secure  compliance  with  and  observance  of  every  such 
order,  decision,  direction,  rule  or  regulation. 


COMPENSATION,   INSURANCE   AND   SAFETY   ACT.  207 

Sec.  63.  The  orders  of  the  commission,  general  or  special,  ^oniers 
its  rules  or  regulations,  findings  and  decisions,  made  and 
entered  under  the  safety  provisions  of  this  act,  may  be  reviewed 
by  the  courts  specified  in  sections  eighty-four  and  eighty-five  of 
this  act  and  within  the  time  and  in  the  manner  therein  specified 
and  not  otherwise. 

Sec.  64.     Nothing  contained  in  this  act  shall  be  construed  Additional 
to  deprive  the  board  of  supervisors  of  any  county,  or  city  and  regulations 
county,  the  board  of  trustees  of  any  city,  or  any  other  public  county  °r 
corporation  or  board  or  department,  of  any  power  or  jurisdic-  HjJ?*" 
tion  over  or  relative  to  any  place  of  employment;  provided, 
that  whenever  the  commission  shall,  by  order,  fix  a  standard  of 
safety  for  employments  or  places  of  employment,  such  order 
shall,  upon  the  filing  by  the  commission  of  a  copy  thereof  with 
the  clerk  of  the  county,  city  and  county,  or  city  to  which  it  may 
apply,  establish  a  minimum  requirement  concerning  the  mat- 
ters covered  by  such  order  and  shall  be  con-trued  in  connec- 
tion with  any  local  order  relative  to  the  same  matter  and  to 
amend  or  modify  any  requirement  in  such  local  order  not  up 
to  the  standard  of  the  order  of  the  commission. 

Sec.  65.     The   commission   shall   have    further   power   and 
authority: 

"(1)   To    establish    and    maintain    museums    of    safety    and  Museums 
hygiene  in  which  shall  be  exhibited  safety  devices,  safeguards 
and  other  means  and  methods  for  the  protection  of  the  life  and 
safety  of  employees,  and  to  publish  and  distribute  bulletins  on 
any  phase  of  this  general  subject. 

(2)  To  cause  lectures  to  be  delivered,  illustrated  by  stere-  jPutbli% 
opticon  or  other  views,  diagrams  or  pictures,  for  the  informa- 
tion of  employers  and  their  employees  and  the  general  public 

in  regard  to  the  causes  and  prevention  of  industrial  accidents, 
occupational  diseases  and  related  subjects. 

(3)  To  appoint  advisers  who  shall,  without  compensation  Bgjf- 
assist  the  commission  in  establishing  standards  of  safety  and 

the  commission  may  adopt  and  incorporate  in  its  general  orders 
such  safety  recommendations  as  it  may  receive  from  such 
advisers. 


Sec.  66.     Every  order  of  the  commission,  general  or  special,  °5J& 


pre- 


sumed to 


its  rules  and  regulations,  findings  and  decisions,  made  and  be 
entered  under  the  safety  provisions  of  this  act  shall  be  admis- reasonab1?- 
sible  as  evidence  in  any  prosecution  for  the  violation  of  any  of 
the  said  provisions  and  shall,  in  every  such  prosecution,  be 
conclusively  presumed  to  be  reasonable  and  lawful  and  to  fix 
a  reasonable  and  proper  standard  and  requirement  of  safety, 
unless,  prior  to  the  institution  of  the  prosecution  for  such  vio- 
lation or  violations,  proceedings  for  a  rehearing  thereon  or  a 
review  thereof  shall  have  been  instituted  as  provided  in  sec- 
tions eighty-one  to  eighty-five,  inclusive,  of  this  act  and  not 
then  finally  determined. 

Sec.  67.     Every  employer,  employee  or  other  person  who,  violation 
either  individually  or  acting  as  an  officer,  agent  or  employee  of  ° 
a  corporation  or  other  person,  violates  any  safety  provision 


208 


INSURANCE   LAWS   OP   CALIFORNIA. 


Separate 
offenses. 


"Accident 
prevention 
fund." 


Informa- 
tion confi- 
dential. 


Reporting 
of  indus- 
trial 
accidents. 


Answers  to 
questions 
of  com- 
mission. 


contained  in  sections  fifty-two,  fifty-three,  fifty-four  or  fifty- 
five  of  this  act,  or  any  part  of  any  such  provision,  or  who  shall 
fail  or  refuse  to  comply  with  any  such  provision  or  any  part 
thereof,  or  who,  directly  or  indirectly,  knowingly  induces 
another  so  to  do  is  guilty  of  a  misdemeanor.  In  any  prosecu- 
tion under  this  section  it  shall  be  deemed  prima  facie  evidence 
of  a  violation  of  any  such  safety  provision,  that  the  accused  has 
failed  or  refused  to  comply  with  any  order,  rule,  regulation  or 
requirement  of  the  commission  relative  thereto  and  the  burden 
of  proof  shall  thereupon  rest  upon  the  accused  to  show  that  he 
has  complied  with  such  safety  provision. 

Sec.  68.  Every  violation  of  the  provisions  contained  in 
sections  fifty-two,  fifty-three,  fifty-four  or  fifty-five,  of  this  act, 
or  any  part  or  portion  thereof,  by  any  person  or  corporation 
is  a  separate  and  distinct  offense,  and,  in  the  case  of  a  con- 
tinuing violation  thereof,  each  day's  continuance  thereof  shall 
constitute  a  separate  and  distinct  offense. 

Sec.  69.  All  fines  imposed  and  collected  under  prosecutions 
for  violations  of  the  provisions  of  sections  fifty-one  to  seventy- 
two  inclusive  of  this  act,  shall  be  paid  into  the  state  treasury  to 
the  credit  of  the  "accident  prevention  fund,"  which  fund  is 
hereby  created. 

Sec.  70.  It  shall  be  unlawful  for  any  member  of  the  com- 
mission, or  for  any  officer  or  employee  of  the  commission,  to 
divulge  to  any  person  not  connected  with  the  administration 
of  this  act  any  confidential  information  obtained  from  any 
person,  concerning  the  failure  of  any  other  person  to  keep  any 
place  of  employment  safe,  or  concerning  the  violation  of  any 
order,  rule  or  regulation  issued  by  the  commission.  Any 
member  of  the  commission  or  any  officer  or  employee  of  the 
commission  divulging  such  confidential  information  shall  be 
guilty  of  a  misdemeanor. 

Sec.  71.  (a)  Every  employer  of  labor,  and  every  insur- 
ance carrier,  is  hereby  required  to  file  with  the  commission, 
under  such  rules  and  regulations  as  the  commission  may  from 
time  to  time  make,  a  full  and  complete  report  of  every  accident 
to  an  employee  arising  out  of  or  in  the  course  of  his  employ- 
ment and  resulting  in  loss  of  life  or  injury  to  such  person. 
Such  reports  shall  be  furnished  to  the  commission  in  such  form 
and  such  detail  as  the  commission  shall  from  time  to  time  pre- 
scribe, and  shall  make  specific  answers  to  all  questions  required 
by  the  commission  under  its  rules  and  regulations.  Any  such 
employer  or  insurance  carrier  who  shall  furnish  such  report 
shall  be  exempt  from  furnishing  any  similar  report  or  reports 
authorized  or  required  under  the  laws  of  this  state. 

(b)  Every  employer  or  insurance  carrier  receiving  from  the 
commission  any  blanks  with  directions  to  fill  out  the  same  shall 
cause  the  same  to  be  properly  filled  out  so  as  to  answer  fully 
and  correctly  each  question  propounded  therein ;  in  case  he  is 
unable  to  answer  any  such  questions  a  good  and  sufficient 
reason  shall  be  given  for  such  failure. 


COMPENSATION,    INSURANCE    AND   SAFETY   ACT.  209 

(c)    No    information    furnished    to    the    commission    by    an  [jjjj™?" 
employer  or  an  insurance  carrier  shall  be  open  to  public  inspec-  open  to 
lion  or  made  public  except  on  order  of  the  commission,  or  by  thepubl,c- 
the  commission  or  a  commissioner  in  the  course  of  a  hearing  or 
proceed ing.     Any  officer  or  employee  of  the  commission  who, 
in  violation  of  the  provisions  of  this  subsection,  divulges  any 
information  shall  be  guilty  of  a  misdemeanor. 

Sec.  72.     (a)   The   commission   shall   investigate   the   cause  study  of 
of  all  industrial  accidents  occurring  within  the  state  in  any  industrial 
employment  or  place  of  employment,  or  directly  or  indirectly  acpl(lents- 
arising  from  or  connected  with  the  maintenance  or  operation 
of  such  employment  or  place  of  employment,  resulting  in  per- 
sonal injury  or  death  and  requiring,  in  the  judgment  of  the 
commission,  such  investigation;  and  the  commission  shall  have 
the  power  to  make  such  orders  or  recommendations  with  respect 
to  such  accidents  as  may  be  just  and  reasonable,  provided  that 
neither  the  order  nor  the  recommendation  of  the  commission, 
nor  any   accident  report  filed   with  the  commission,  shall  be 
admitted  as  evidence  in  any  action  for  damages  or  any  pro- 
ceeding to  recover  compensation,  based  on  or  arising  out  of 
such  injury  or  death. 

(b)  For  the  purpose  of  making  any  investigation  which  the  Sj^J? 
commission  is  authorized  to  make  under  the  provisions  of  this  employ- 
section,  or  for  the  purpose  of  collecting  statistics  or  examining  Inent' 
the  provision  made  for  the  safety  of  employees,  any  member 

of  the  commission,  inspector  or  other  person  designated  by 
the  commission  for  that  purpose,  may  enter  any  place  of 
employment. 

(c)  Any  employer,  insurance  carrier  or  any  other  person  obstrw- 
who  shall  violate1  or  omit  to  comply  with  any  of  the  provisions  employer 
of  this  section,  or  who  shall  in  any  way  obstruct  or  hamper  the  J^SSl 
commission,  any  commissioner  or  other  person  conducting  any 
investigation  ant  hoi* i zed  to  be  undertaken  or  made  by  the  com- 
mission, shall  be  guilty  of  a  misdemeanor. 

Proceedings  Before  the  Commission. 

Skc.  73.      (a)   All  proceedings  for  the  recovery  of  compen-  Exclusive 

sat  ion.  or  concerning  any  right  or  liability  arising  out  of  ortSmS6" 

incidental  thereto,  or  for  the  enforcement  against  the  employer  cpmpensa- 

p  -,.   ,  .-,.     '    ,.  l  t ion  eases, 

or    an    insurance    earner    of    any    liability    for   compensation 

imposed  upon  him  by  this  act  in  favor  of  the  injured  employee, 
his  dependents  or  any  third  person,  or  for  the  determination 
of  any  question  as  to  the  distribution  of  compensation  among 
dependents  or  other  persons  or  for  the  determination  of  any 
•  I  nest  ion  as  to  who  are  dependents  of  any  deceased  employee, 
or  what  persons  are  entitled  to  any  benefit  under  the  compen- 
sation provisions  of  this  act,  or  for  obtaining  any  order  which 
by  this  act  the  commission  is  authorized  to  make,  shall  be 
instituted  before  the  commission,  and  not  elsewhere,  except  as 
otherwise  in  this  act  provided,  and  the  commission  is  hereby 
vested  with  full  power,  authority  and  jurisdiction  to  try  and 
finally  determine  all  such  matters,  subject  only  to  the  review 

14— IL 


210 


INSURANCE   LAWS   OP   CALIFORNIA. 


Acts  and 

orders 

prima 

facie 

lawful. 


Service 
of  orders, 
etc. 


Powers  of 
employees 
of  com- 
mission. 


Service 
upon  pub- 
lic officers. 


Commis- 
sion may 
make  rules 
of 
procedure; 


Appoint 
trustees, 
etc.; 


by  the  courts  in  this  act  specified  and  in  the  manner  and  within 
the  time  in  this  act  provided. 

(b)  All  orders,  rules  and  regulations,  findings,  decisions 
and  awards  of  the  commission  in  conformity  with  law  shall  be 
in  force  and  shall  be  prima  facie  lawful ;  and  all  such  orders, 
rules  and  regulations,  findings,  decisions  and  awards  shall  be 
conclusively  presumed  to  be  reasonable  and  lawful,  until  and 
unless  they  are  modified  or  set  aside  by  the  commission  or  upon 
a  review  by  the  courts  in  this  act  specified  and  within  the  time 
and  in  the  manner  herein  specified. 

Sec.  74.  (a)  Any  notice,  order  or  decision  required  by  this 
act  to  be  served  upon  any  person  or  party  either  before,  during 
or  after  the  institution  of  any  proceeding  before  the  commis- 
sion, may  be  served  in  the  manner  provided  by  chapter  V,  title 
XIV  of  part  II  of  the  Code  of  Civil  Procedure  of  this  state, 
unless  otherwise  directed  by  the  commission  or  a  member 
thereof,  in  which  event  the  same  shall  be  served  in  accordance 
with  the  order  or  direction  of  said  commission  or  member 
thereof. 

(&)  The  secretary,  assistant  secretary  and  the  inspectors 
appointed  by  the  commission  shall  have  all  of  the  powers  con- 
ferred by  law  upon  peace  officers  to  carry  weapons,  make 
arrests  and  serve  warrants  and  other  process  in  any  county  or 
city  and  county  of  this  state. 

(c)  Any  such  notice,  order  or  decision  affecting  the  state  or 
any  city  and  county,  city,  school  district  or  public  corporation 
therein,  shall  be  served  upon  the  same  officer,  officers,  person  or 
persons,  upon  whom  the  service  of  similar  notices,  orders  or 
decisions  is  authorized  by  law. 

Sec.  75.  The  commission  shall  have  full  power  and  au- 
thority : 

(1)  To  adopt  reasonable  and  proper  rules  of  practice  and 
procedure  • 

(2)  To  regulate  and  provide  the  manner,  and  by  whom, 
minors  and  incompetent  persons  shall  appear  and  be  repre- 
sented before  it; 

(3)  To  appoint  a  trustee  or  guardian  ad  litem  to  appear  for 
and  represent  any  such  minor  or  incompetent  upon  such  terms 
and  conditions  as  it  may  deem  proper;  and  such  guardian  or 
trustee  must  give  a  bond  in  the  same  form  and  of  the  same 
character  required  by  law  from  a  guardian  appointed  by  the 
courts  and  in  such  an  amount  as  the  commission  or  a  commis- 
sioner may  fix  and  determine,  such  bond  to  be  approved  by 
the  commission  or  a  commissioner,  and  such  guardian  or  trustee 
shall  not  be  discharged  from  liability  until  he  shall  have  filed 
an  account  with  the  commission  or  with  the  probate  court  and 
such  account  shall  have  been  approved.  The  trustee  or  guard- 
ian shall  be  entitled  to  receive  such  compensation  for  his 
services  as  shall  be  fixed  and  allowed  by  the  commission  or  by 
the  probate  court ; 


COMPENSATION,   INSURANCE   AND   SAFETY  ACT.  211 

(4)  To  provide  for  the  joinder  in  the  same  proceeding  of  jJJJJ5les. 
all  persons  interested  therein,  whether  as  employer,  insurance 
carrier,  employee,  dependent,  creditor  or  otherwise; 

(5)  To  regulate  and  prescribe  the  kind  and  character  of 
notices,  where  not  otherwise  prescribed  by  this  act,  and  the 
service  thereof; 

(6)  To  regulate  and  prescribe  the  nature  and  extent  of  the 
proofs  and  evidence. 

Sec.  76.  (a)  The  commission  may  by  order  entered  upon 
its  minutes,  upon  the  agreement  of  the  parties,  upon  the  appli- 
cation of  either,  or  of  its  own  motion,  and  either  with  or  with- 
out notice,  direct  and  order  a  reference  in  the  following  cases : 

(1)  To  try  any  or  all  of  the  issues  in  any  proceeding  before  Try  any 
it,  whether  of  fact  or  of  law,  and  to  report  a  finding,  order,  iSSUes 
decision  or  award  to  be  based  thereon.  and°ieit; 

(2)  To  ascertain  a  fact  necessary  to  enable  the  commission 
to  determine  any  proceeding  before  it  or  to  make  any  order, 
decision  or  award  that  the  commission  is  authorized  to  make 
under  this  act,  or  that  is  necessary  for  the  information  of  the 
commission. 

( b )  The  commission  may  appoint  one  or  more  referees  in  ^JJJJJJf 
any  proceeding,  as  it  may  deem  necessary  or  advisable,  and 

may  refer  separate  matters  arising  out  of  the  same  proceeding 
to  different  referees.  It  may  also,  in  its  discretion,  appoint 
general  referees  who  are  residents  of  the  county  or  city  and 
county  for  which  they  are  appointed  and  who  shall  hold  office 
during  the  pleasure  of  the  commission.  Any  referee  appointed 
by  the  commission  shall  have  such  powers,  jurisdiction  and 
authority  as  is  granted  under  the  law,  by  the  order  of  appoint- 
ment and  by  the  rules  of  the  commission  and  shall  receive  such 
salary  or  compensation  for  his  services  as  may  be  fixed  by  the 
commission. 

(c)  Any  party  to  the  proceeding  may  object  to  the  appoint-  0bje<lton 
ment  of  any  person  as  referee  upon  any  one  or  "more  of  the  to  referee. 
grounds  specified  in  section  641  of  the  Code  of  Civil  Procedure 

and  such  objection  must  be  heard  and  disposed  of  by  the  com- 
mission. Affidavits  may  be  read  and  witnesses  examined  as  to 
such  objections. 

(d)  Before  entering  upon  his  duties,  the  referee  must  be0atnof 
sworn  before  an  officer  authorized  to  administer  oaths,  faith-  referee, 
fully  and  fairly  to  hear  and  determine  the  allegations  and 
evidence  of  the' parties  in  relation  to  the  matters  in  the  refer- 
ence, and  to  make  just  findings  and  report  according  to  his 
understanding. 

(e)  The  referee  must  report  his  findings  in  writing  to  the  Referee.s 
commission  within  twenty  days  after  the  testimony  is  closed,  findings. 
Such  report  shall  be  made  in  the  form  prescribed  by  the  com- 
mission and  shall  include  all  matters  required  to  be  included  in 

the  order  of  reference  or  by  the  rules  of  the  commission.  The 
fads  found  and  conclusions  of  law  must  be  separately  stated. 


212  INSURANCE   LAWS   OF   CALIFORNIA. 

report  o"        (^)   Upon  the  filing  of  the  report  of  the  referee,  the  commis- 
referee.       sion  may  confirm,  adopt,  modify  or  set  aside  the  same  or  any 
part  thereof  and  may,  either  with  or  without  further  proceed- 
ings, and  either  with  or  without  notice,  enter  its  order,  findings, 
decision  or  award  based  in  whole  or  in  part  upon  the  report  of 
the  referee, 
^otechni-       Sec.  77.     (a)  All   hearings    and   investigations   before   the 
evidence,     commission  or  any  member  thereof,  or  any  referee  appointed 
thereby,  shall  be  governed  by  this  act  and  by  the  rules  of  prac- 
tice and  procedure  adopted  by  the  commission,  and  in  the  con- 
duct thereof  neither  the  commission  nor  any  member  thereof 
nor  any  referee  appointed  thereby  shall  be  bound  by  the  tech- 
nical rules  of  evidence.     No  informality  in  any  proceeding  or 
in  the  manner  of  taking  testimony  shall  invalidate  any  order, 
decision,  award,  rule  or  regulation  made,  approved  or  confirmed 
by  the  commission. 
Deposi-  (ft)   The  commission  or  any  member  thereof  or  any  party  to 

the  action  or  proceeding  may,  in  any  investigation  or  hearing 
before  the  commission,  cause  the  deposition  of  witnesses  resid- 
ing within  or  without  the  state  to  be  taken  in  the  manner  pre- 
scribed by  law  for  like  depositions  in  civil  actions  in  the  supe- 
rior courts  of  this  state,  and  to  that  end  may  compel  the  attend- 
ance of  witnesses  and  the  production  of  books,  documents, 
papers  and  accounts, 
oaths,  Sec.  78.     The  commission  and  each  member  thereof,  its  sec- 

prodSon  retary  and  referees,  shall  have  power  to  administer  oaths,  cer- 
papersfetc.  *iftf  *°  a^  official  acts,  and  to  issue  subpoenas  for  the  attendance 
of  witnesses  and  the  production  of  papers,  books,  accounts, 
documents  and  testimony  in  any  inquiry,  investigation,  hear- 
ing or  proceeding  in  any  part  of  the  state.  Each  witness  who 
shall  appear,  by  order  of  the  commission  or  a  member  thereof, 
or  a  referee  appointed  thereby,  shall  be  entitled  to  receive,  if 
demanded,  for  his  attendance  the  same  fees  and  mileage 
allowed  by  law  to  a  witness  in  civil  cases,  which  amount  shall 
be  paid  by  the  party  at  whose  request  such  witness  is  sub- 
poenaed, unless  otherwise  ordered  by  the  commission.  When 
any  witness  who  has  not  been  required  to  attend  at  the  request 
of  any  party  is  subpoenaed  by  the  commission  his  fees  and  mile- 
age may  be  paid  from  the  funds  appropriated  for  the  use  of 
the  commission  in  the  same  manner  as  other  expenses  of  the 
commission  are  paid.  Any  witness  subpoenaed,  except  one 
Fees  and  whose  fees  and  mileage  may  be  paid  from  th'e  funds  of  tne 
mileage  of  commission,  may,  at  the  time  of  service,  demand  the  fee  to 
which  he  is  entitled  for  travel  to  and  from  the  place  at  which 
he  is  required  to  appear,  and  one  day's  attendance.  If  such 
witness  demands  such  fees  at  the  time  of  service,  and  they  are 
not  at  that  time  paid  or  tendered,  he  shall  not  be  required  to 
attend  before  the  commission,  member  thereof,  or  referee  as 
directed  in  the  subpoena.  All  fees  or  mileage  to  which  any 
witness  is  entitled  under  the  provisions  of  this  section  may  be 
collected  by  action  therefor  instituted  by  the  person  to  whom 
such  fees  are  payable. 


COMPENSATION,   INSURANCE   AND   SAFETY   ACT.  213 

Sec.  79.  The  superior  court  in  and  for  the  county,  or  city  ^^0 
and  county,  in  which  any  inquiry,  investigation,  hearing  or  enforce 
proceeding  may  be  held  by  the  commission  or  any  member  or  ers* 
thereof  or  referee  appointed  thereby,  shall  have  the  power  to 
compel  the  attendance  of  witnesses,  the  giving  of  testimony 
and  the  production  of  papers,  including  books,  accounts  and 
documents,  as  required  by  any  subpoena  issued  by  the  commis- 
sion or  member  thereof  or  referee.  The  commission  or  the 
member  thereof  or  the  referee,  before  whom  the  testimony  is  to 
be  given  or  produced,  in  case  of  the  refusal  of  any  witness  to 
attend  or  testify  or  produce  any  papers  required  by  such 
Bubpcena,  may  report  to  the  superior  court  in  and  for  the 
county,  01*  city  and  county,  in  which  the  proceeding  is  pend- 
ing, by  petition,  setting  forth  that  due  notice  has  been  given  of 
the  time  and  place  of  attendance  of  said  witness,  or  the  pro- 
duction of  said  papers,  and  that  the  witness  has  been  sub- 
poenaed in  the  manner  prescribed  in  this  act,  and  that  the 
witness  has  failed  and  refused  to  attend  or  produce  the  papers 
required  by  the  subpoena,  or  has  refused  to  answer  questions 
propounded  to  him  in  the  course  of  such  proceeding,  and  ask 
an  order  of  said  court,  compelling  the  witness  to  attend  and 
testify  or  produce  said  papers  before  the  commission.  The  JJjJJJd0 
court,  upon  the  petition  of  the  commission  or  such  member 
thereof  or  referee,  shall  enter  an  order  directing  the  witness  to 
appear  before  the  court  at  a  time  and  place  to  be  fixed  by  the 
court  in  such  order,  the  time  to  be  not  more  than  ten  days 
from  the  date  of  the  order,  and  then  and  there  show  cause  why 
he  had  not  attended  and  testified  or  produced  said  papers 
before  the  commission,  member  thereof  or  referee.  A  copy 
of  said  ordrn-  shall  be  served  upon  said  witness.  If  it  shall 
appear  to  the  court  that  said  subpoena  was  regularly  issued  by 
the  commission  or  member  thereof  or  referee,  the  court  shall 
thereupon  enter  an  order  that  said  witness  appear  before  the 
commission  or  member  thereof  or  referee  at  a  time  and  place 
to  be  fixed  in  such  order,  and  testify  or  produce  the  required 
papers,  and  upon  failure  to  obey  said  order,  said  witness  shall 
be  dealt  with  as  for  contempt  of  court.  The  remedy  provided  fumull 
in  this  section  is  cumulative,  and  shall  not  be  construed  to  tive- 
impair  or  interfere  with  the  power  of  the  commission  or  a 
member  thereof  to  enforce  the  attendance  of  witnesses  and  the 
production  of  papers,  and  to  punish  for  contempt  in  the  same 
manner  and  to  the  same  extent  as  courts  of  record. 

Sec.  80.     (a)   The  commission  is  hereby  vested  with  full  pien»ry 
power,  authority  and  jurisdiction  to  do  and  perform  any  and  thecom- 
all  things,  whether  herein  specifically  designated,  or  in  addition  mi8S,on- 
thereto,  which  are  necessary  or  convenient  in  the  exercise  of 
any  power,  authority  or  jurisdiction  conferred  upon  it  under 
this  act. 

(b)   The  commission   and  each  member  thereof  shall  have  issuance 
power   to    issue   writs   of  summons,   warrants   of  attachment,  J*.. **' 
warrants  of  commitment  and  all  necessary  process  in  proceed- 
ings for  contempt,  in  like  manner  and  to  the  same  extent  as 


214 


INSURANCE   LAWS   OP   CALIFORNIA. 


Rehear- 
ings. 


Must 

precede 

appeal. 


Matter  to 
be  con- 
tained in 
application 
for  re- 
hearing. 


Service. 


Answer. 


Action  on 
appli- 
cation. 


courts  of  record.  The  process  issued  by  the  commission  or 
any  member  thereof  shall  extend  to  all  parts  of  the  state  and 
may  be  served  by  any  persons  authorized  to  serve  process  of 
courts  of  record,  or  by  any  person  designated  for  that  pur- 
pose by  the  commission  or  any  member  thereof.  The  person 
executing  any  such  process  shall  receive  such  compensation 
as  may  be  allowed  by  the  commission,  not  to  exceed  the  fees 
now  prescribed  by  law  for  similar  services,  and  such  fees  shall 
be  paid  in  the  same  manner  as  provided  herein  for  the  fees  of 
witnesses. 

Rehearings. 
Sec.  81.  (a)  Any  party  or  person  aggrieved  directly  or 
indirectly  by  any  final  order,  decision,  award,  rule  or  regula- 
tion of  the  commission,  made  or  entered  under  any  provision 
contained  in  this  act,  may  apply  to  the  commission  for  a  rehear- 
ing in  respect  to  any  matters  determined  or  covered  by  such 
final  order,  decision,  award,  rule  or  regulation  and  specified 
in  the  application  for  rehearing  within  the  time  and  in  the 
manner  hereinafter  specified,  and  not  otherwise. 

(b)  No  cause  of  action  arising  out  of  any  such  final  order, 
decision  or  award  shall  accrue  in  any  court  to  any  person 
until  and  unless  such  person  shall  have  made  application  for 
such  rehearing,  and  such  application  shall  have  been  granted 
or  denied;  provided,  that  nothing  herein  contained  shall  be 
construed  to  prevent  the  enforcement  of  any  such  final  order, 
decision,  award,  rule  or  regulation  in  the  manner  provided  in 
this  act. 

(c)  Such  application  shall  set  forth  specifically  and  in  full 
detail  the  grounds  upon  which  the  applicant  considers  said 
final  order,  decision,  award,  rule  or  regulation  is  unjust  or 
unlawful,  and  every  issue  to  be  considered  by  the  commission. 
Such  application  must  be  verified  upon  oath  in  the  same 
manner  as  required  for  verified  pleadings  in  the  courts  of 
record  and  must  contain  a  general  statement  of  any  evidence 
or  other  matters  upon  which  the  applicant  relies  in  support 
thereof.  The  applicant  for  such  rehearing  shall  be  deemed  to 
have  finally  waived  all  objections,  irregularities  and  illegalities 
concerning  the  matter  upon  which  such  rehearing  is  sought 
other  than  those  set  forth  in  the  application  for  such  rehearing. 

(d)  A  copy  of  such  application  for  rehearing  shall  be  served 
forthwith  on  all  adverse  parties,  if  any,  and  any  such  adverse 
party  may  file  an  answer  thereto  within  ten  days  thereafter. 
Such  answer  must  likewise  be  verified.  If  there  are  no  adverse 
parties,  such  application  may  be  heard  ex  parte  or  the  commis- 
sion may  require  the  application  for  rehearing  to  be  served  on 
such  parties  as  may  be  designated  by  it. 

(e)  Upon  filing  of  an  application  for  a  rehearing,  if  the 
issues  raised  thereby  have  theretofore  been  adequately  consid- 
ered by  the  commission,  it  may  determine  the  same  by  con- 
firming without  hearing  its  previous  determination,  or  if  a 
rehearing  is  necessary  to  determine  the  issues  raised,  the  com- 
mission shall  order  a   rehearing  thereon   and   consider   and 


COMPENSATION,   INSURANCE   AND   SAFETY  ACT.  215 

determine  the  matter  or  matters  raised  by  such  application. 
Notice  of  the  time  and  place  of  such  rehearing  shall  be  given 
to  the  applicant  and  the  adverse  parties,  if  any,  and  to  such 
other  persons  as  the  commission  may  order. 

(/)   If  after  such  rehearing  and  a  consideration  of  all  the  (^°^1as_ 
facts,  including  those  arising  since  the  making  of  the  order,  modi?/7 
decision  or  award  involved,  the  commission  shall  be  of  the  order™1 
opinion  that  the  original  order,  decision  or  award  or  any  part 
thereof,  is  in  any  respect  unjust  or  unwarranted,  or  should  be 
changed,  the  commission  may  abrogate,  change  or  modify  the 
same.    An  order,  decision  or  award  made  after  such  rehearing, 
abrogating,  changing  or  modifying  the  original  order,  decision 
or  award  shall  have  the  same  force  and  effect  as  an  original 
order,  decision  or  award,  but  shall  not  affect  any  right  or  the 
enforcement  of  any  right  arising  from  or  by  virtue  of  the 
original  order,  decision  or  award,  unless  so  ordered  by  the 
commission.     An  application  for  a  rehearing  shall  be  deemed  ^Jlica" 
to  have  been  denied  by  the  commission  unless  it  shall  have  deemed 
been  acted  upon  within  thirty  days  from  the  date  of  filing;  demed- 
provided,  however,  that  the  commission  may  upon  good  cause 
being  shown  therefor,  extend  the  time  within  which  it  may  act 
upon  such  application  for  rehearing  for  not  exceeding  thirty 
days. 

Sec.  82.     (a)  At  any  time  within  twenty  days  after  the  jjJJ^8 
service  of  any  final  order  or  decision  of  the  commission  award-  hearing 
ing  or  denying  compensation,  or  arising  out  of  or  incidental  BationPCU~ 
thereto,  any  party  or  parties  aggrieved  thereby  may  apply  for  cases- 
such  rehearing  upon  one  or  more  of  the  following  grounds  and 
upon  no  other  grounds: 

(1)  That  the  commission  acted  without  or  in  excess  of  its 
powers. 

(2)  That  the  order,  decision  or  award  was  procured  by 
fraud. 

(3)  That  the  evidence  does  not  justify  the  finding  of  fact. 

(4)  That  the  applicant  has  discovered  new  evidence,  mate- 
rial to  him,  and  which  he  could  not,  with  reasonable  diligence 
have  discovered  and  produced  at  the  hearing. 

(5)  That  the  findings  of  fact  do  not  support  the  order, 
decision  or  award. 

(b)  Nothing  contained  in  this  section  shall,  however,  be  con-  ^^y^1. 
strued  to  limit  the  right  of  the  commission,  at  any  time  within  tions  on 
two  hundred  forty-five  weeks  from  the  date  of  its  award,  and  mission. 
from  time  to  time,  after  due  notice  and  upon  the  application  of 
any  party  interested,  to  review,  diminish  or  increase,  within 
the  limits  provided  by  this  act,  any  compensation  awarded 
upon  the  grounds  that  the  disability  of  the  person  in  whose 
favor  such  award  was  made  has  either  increased  or  diminished 
or  terminated. 

Sec.  83.     (a)   At  any   time  within  twenty  days   after  the  gJ?SSi?ar- 
service  of  any  other  final  order,  decision,  rule  or  regulation  ingin 
made  by  the  commission  under  the  provisions  of  this  act,  any  matters. 
party  or  parties,  person  or  persons  aggrieved  thereby  or  other- 


216 


INSURANCE   LAWS   OF    CALIFORNIA. 


Removal 
of  limita- 
tion on 
com- 
mission. 


Applica- 
tion for 
review. 


Return 
of  writ. 


Grounds 

for 

review. 


Findings 
to  be  con- 
clusive. 


wise  affected,  directly  or  indirectly,  may  apply  for  such  rehear- 
ing upon  one  or  more  of  the  following  grounds  and  upon  no 
other  grounds: 

(1)  That  the  commission  acted  without  or  in  excess  of  its 
powers. 

(2)  That  the  order  or  decision  was  procured  by  fraud. 

(3)  That  the  order,  decision,  rule  or  regulation  is  unreason- 
able. 

(b)  Nothing  contained  in  this  section  shall  be  construed  to 
limit  the  right  of  the  commission,  at  any  time  and  from  time 
to  time,  to  adopt  new  or  different  rules  or  regulations  or  new 
or  different  standards  of  safety,  or  to  abrogate,  change  or 
modify  any  existing  rule,  regulation,  or  standard,  or  any  pari 
thereof,  or  to  deprive  the  commission  of  continuing  jurisdic- 
tion over  the  same  or  to  prevent  the  enforcement  in  the  manner 
provided  by  this  act,  of  any  rules,  regulations  or  standard  of 
the  commission,  or  any  part  thereof,  when  so  adopted,  or 
changed,  or  modified. 

Review  of  Award  or  Order. 
Sec.  84.  (a)  Within  thirty  days  after  the  application  for 
a  rehearing  is  denied,  or,  if  the  application  is  granted,  within 
thirty  days  after  the  rendition  of  the  decision  on  the  rehearing, 
any  party  affected  thereby  may  apply  to  the  supreme  court  of 
this  state  or  to  the  district  court  of  appeal  of  the  appellate' 
district  in  which  such  person  resides,  for  a  writ  of  certiorari 
or  review  (hereinafter  referred  to  as  a  writ  of  review)  for  the 
purpose  of  having  the  lawfulness  of  the  original  order,  decision 
or  award  or  the  order,  decision  or  award  on  rehearing  inquired 
into  and  determined. 

(b)  Such  writ  shall  be  made  returnable  not  later  than  thirty 
days  after  the  date  of  the  issuance  thereof,  and  shall  direct  the 
commission  to  certify  its  record  in  the  case  to  the  court.  On 
the  return  day  the  cause  shall  be  heard  in  the  court  unless  for 
good  cause  the  same  be  continued.  No  new  or  additional  evi- 
dence may  be  introduced  in  such  court  but  the  cause  shall  be 
heard  on  the  record  of  the  commission  as  certified  to  by  it.  The 
review  shall  not  be  extended  further  than  to  determine  whether 
or  not : 

(1)  The  commission  acted  without  or  in  excess  of  its  powers. 

(2)  The  order,  decision  or  award  was  procured  by  fraud. 

(3)  The  order,  decision,  rule  or  regulation  is  unreasonable. 

(4)  If  findings  of  fact  are  made,  whether  or  not  such  find- 
ings of  fact  support  the  order,  decision  or  award  under  review. 

(c)  The  findings  and  conclusions  of  the  commission  on  ques- 
tions of  fact  shall  be  conclusive  and  final  and  shall  not  be 
subject  to  review ;  such  questions  of  fact  shall  include  ultimate 
facts  and  the  findings  and  conclusions  of  the  commission.  The 
commission  and  each  party  to  the  action  or  proceeding  before 
the  commission  shall  have  the  right  to  appear  in  the  review 
proceeding.  Upon  the  hearing  the  court  shall  enter  judgment 
either  affirming,  modifying  or  setting  aside  the  order,  decision 

or  award. 


COMPENSATION,   INSURANCE   AND   SAFETY   ACT.  217 

(d)   The  provisions  of  the  Code  of  Civil  Procedure  of  this  oJJffpJo, 
state  relating  to  writs  of  review  shall,  so  far  as  applicable  and  cedureto 
not  in  conflict  with  this  act,  apply  to  proceedings  in  the  courts  appy' 
under  the  provisions  of  this  section.     No  court  of  this  state 
(except  the  supreme  court  and  the  district  courts  of  appeal  to 
the  extent  herein  specified)  shall  have  jurisdiction  to  review, 
reverse,  correct  or  annul  any  order,  decision  or  award  of  the 
commission  or  to  suspend  or  delay  the  operation  or  execution 
thereof,  or  to  restrain,  enjoin  or  interfere  with  the  commission 
in  the  performance  of  its  duties;  provided,  that  a  writ  of  man- 
damus shall  lie  from  the  supreme  court  or  the  district  courts 
o!'  appeal  in  all  proper  cases. 

Sec.  85.     (a)  The  tiling  of  an  application  for  a  rehearing  suspension 

..  of  order 

shall  have  the  effect  of  suspending  the  order,  decision,  award,  etc. 
rule  or  regulation  affected,  in  so  far  as  the  same  applies  to 
the  parties  to  such  application,  unless  otherwise  ordered  by  the 
commission,  for  a  period  of  ten  days,  and  the  commission  may, 
in  its  discretion  and  upon  such  terms  and  conditions  as  it  may 
by  order  direct,  stay,  suspend  or  postpone  the  same  during  the 
pendency  of  such  rehearing. 

(&)  The  filing  of  an  application  for,  or  the  pendency  of,  a 
writ  of  review,  shall  not  of  itself  stay  or  suspend  the  operation 
of  the  order,  decision,  award,  rule  or  regulation  of  the  commis- 
sion subject  to  review,  but  the  court  before  which  such  appli- 
cation is  filed  may,  in  its  discretion,  stay  or  suspend  in  whole 
or  in  part  the  operation  of  the  order,  decision,  award,  rule  or 
regulation  of  the  commission  subject  to  review  upon  such  terms 
'<\ui\  conditions  as  it  may  by  order  direct. 

Sec.  86.     (a)  Whenever  this   act,   or  any  part  or  section  Act  to  be 
thereof,  is  interpreted  by  a  court,  it  shall  be  liberally  construed  construed. 
by  such  court. 

(b)  If  any  section,  subsection,  subdivision,  sentence,  clause  J* jS^Jid 
or  phrase  of  this  act  is  for  any  reason  held  to  be  unconstitu-  uneonsti- 
tional,  such  decision  shall  not  affect  the  validity  of  the  remain-  tutIonHl- 
ing  portions  of  this  act.     The  legislature  hereby  declares  that 

it  would  have  passed  this  act,  and  each  section,  subsection,  sub- 
division, sentence,  clause  and  phrase  thereof,  irrespective  of 
the  fact  that  any  one  or  more  sections,  subsections,  subdivisions, 
sentences,  clauses  or  phrases  is  declared  unconstitutional. 

(c)  This  act  shall  not  be  construed  to  apply  to  employers  Not*© 
or  employments  which,  according  to  •  law,  are  so  engaged  in  interstate 
interstate  commerce  as  not  to  be  subject  to  the  legislative  power  commerce- 
of  the  state  or  to  employees  injured  while  they  are  so  engaged, 
except  in  so  far  as  this  act  may  be  permitted  to  apply  under  the 
provisions  of  the  Constitution  of  the  United  States  or  the  acts 

of  congress. 

Sec.  87.     (a)   Any  employer,  having  in  his  employment  any  Election  oi 
employee  not  included  within  the  term  "employee"  as  defined  uoTbT* 
by  section  fourteen  of  this  act  or  not  entitled  to  compensation  JH5sons 
under  this  act,  and  any  such  employee,  may,  by  their  joint  covered bj 
election,  elect  to  come  under  the  compensation  provisions  of  sections? 
this  act  in  the  manner  hereinafter  provided. 


218 


INSURANCE   LAWS   OP   CALIFORNIA. 


Method  of 
making 
such 
election. 


Their  em- 
ployees 
presumed 
to  be 

under  com- 
pensation 
unless 
giving 
contrary 
notice. 


Annua] 

report  to 
governor. 


Appro- 
priation. 


Acts 
repealed. 


Not  retro- 
active. 


In  effect. 


( b )  Such  election  on  the  part  of  the  employer  shall  be  made 
by  filing  with  the  commission  a  written  statement  to  the  effect 
that  he  accepts  the  compensation  provisions  of  this  act,  which, 
when  filed,  shall  operate,  within  the  meaning  of  section  twelve 
of  this  act,  to  subject  him  to  the  compensation  provisions  of 
this  act,  and  of  all  acts  amendatory  thereof,  for  the  term  of  one 
year  from  the  date  of  filing,  and  thereafter  without  further 
act  on  his  part,  for  successive  terms  of  one  year  each,  unless 
such  employer  shall,  at  least  sixty  days  prior  to  the  expiration 
of  such  first  or  any  succeeding  year,  file  in  the  office  of  the 
commission  a  notice  in  writing  that  he  withdraws  his  election. 
Such  acceptance  shall  not  be  held  to  include  employees  whose 
employment  is  both  casual  and  not  in  the  usual  course  of  the 
trade,  business,  profession  or  occupation  of  the  employer,  unless 
expressly  mentioned  therein. 

(c)  Any  employee  in  the  service  of  any  such  employer,  shall 
be  deemed  to  have  accepted,  and  shall,  within  the  meaning  of 
section  twelve  of  this  act,  be  subject  to  the  compensation  pro- 
visions of  this  act,  and  of  any  act  amendatory  thereof,  if,  at 
the  time  of  the  accident  for  which  liability  is  claimed : 

(1)  The  employer  charged  with  such  liability  is  subject  to 
the  compensation  provisions  of  this  act,  whether  the  employee 
has  actual  notice  thereof  or  not ;  and 

(2)  Such  employee  shall  not,  at  the  time  of  entering  into 
his  contract  of  hire,  have  given  to  his  employer  notice  in  writ- 
ing that  he  elects  not  to  be  subject  to  the  compensation  provi- 
sions of  this  act ;  or,  in  the  event  that  such  contract  of  hire  was 
made  in  advance  of  the  election  by  the  employer,  such  employee 
shall  have  given  to  his  employer  notice  in  writing  that  he  elects 
to  be  subject  to  such  provisions,  or  without  giving  either  of 
such  notices,  shall  have  remained  in  the  service  of  such  em- 
ployer for  thirty  days  after  the  employer  has  filed  his  election. 

Sec.  88.  The  commission  shall,  not  later  than  the  first  day 
of  December  of  each  calendar  year,  subsequent  to  the  year 
1913,  make  a  report  to  the  governor  of  the  state  covering  its 
entire  operations  and  proceedings  for  the  previous  fiscal  year, 
with  such  suggestions  or  recommendations  as  it  may  deem  of 
value  for  public  information.  Such  report  shall  be  printed 
and  a  copy  thereof  furnished  to  all  applicants  within  this  state. 

Sec.  89.  The  sum  of  one  hundred  eighty-seven  thousand 
four  hundred  seventy  dollars  is  hereby  appropriated  out  of 
any  money  in  the  state  treasury,  not  otherwise  appropriated, 
to  be  used  by  the  industrial  accident  commission  in  carrying 
out  the  purposes  of  this  act,  and  the  controller  is  hereby 
directed  to  draw  his  warrant  on  the  general  fund  from  time 
to  time  in  favor  of  said  industrial  accident  commission  for  the 
amounts  expended  under  its  direction,  and  the  treasurer  is 
hereby  authorized  and  directed  to  pay  the  same. 

Sec.  90.  All  acts  or  parts  of  acts  inconsistent  with  this  act 
are  hereby  repealed. 

Sec.  91.  The  compensation  provisions  of  this  act  shall  not 
apply  to  any  injury  sustained  prior  to  the  taking  effect  thereof. 

Sec.  92.  This  act  shall  take  effect  and  be  in  force  on  and 
after  the  first  day  of  January,  A.  D.  1914. 


TAXATION    OF   INSURANCE    COMPANIES.  219 


An  act  to  carry  into  effect  the  provisions  of  section  fourteen  of  article  thir- 
teen of  the  constitution  of  the  State  of  California  as  said  constitution  was 
amended  November  8,  1910,  providing  for  the  separation  of  state  from  local 
taxation,  and  providing  for  the  taxation  of  public  service  and  other  corpora- 
tions, banks  and  insurance  companies  for  the  benefit  of  the  state,  all  relating 
to  revenue  and  taxation. 

[Stats  of  1911,  p.  530;  Amended  Stats.  1913,  p.  3,  and  Amended  Stats,  of  1913, 

p.  615.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Subjects  taxed  exclusively  for  state  purposes. 

Section  1.  Taxes  levied,  assessed  and  collected  as  hereinafter  pro- 
vided upon  railroads,  including  street  railways,  whether  operated  in 
one  or  more  counties;  sleeping  car,  dining  car,  drawing-room  car  and 
palace  car  companies,  refrigerator,  oil,  stock,  fruit,  and  other  car-loan- 
ing and  other  car  companies  operating  upon  railroads  in  this  state; 
companies  doing  express  business  on  any  railroad,  steamboat,  vessel,  or 
stage  line  in  this  state ;  telegraph  companies ;  telephone  companies ;  com- 
panies engaged  in  the  transmission  or  sale  of  gas  or  electricity;  insur- 
ance companies ;  banks,  banking  associations,  savings  and  loan  societies, 
and  trust  companies ;  and  taxes  upon  all  franchises  of  every  kind  and 
nature,  shall  be  entirely  and  exclusively  for  state  purposes,  and  shall  be 
assessed  and  levied  by  the  state  board  of  equalization,  and  collected  in 
the  manner  hereinafter  provided.  The  word  "company"  and  the  word 
"companies"  as  used  in  this  act  shall  include  persons,  partnerships, 
joint  stock  associations,  companies,  and  corporations. 

Public  service  corporations,  how  taxed. 

Sec.  2.  All  railroad  companies,  including  street  railways,  whether 
operated  in  one  or  more  counties ;  all  sleeping  car,  dining  car,  drawing- 
room  car  and  palace  car  companies,  all  refrigerator,  oil,  stock,  fruit,  and 
other  car-loaning,  and  other  car  companies,  operating  upon  the  railroads 
in  this  state;  all  companies  doing  express  business  on  any  railroad, 
steamboat,  vessel,  or  stage  line  in  this  state ;  all  telegraph  and  telephone 
companies ,  and  all  companies  engaged  in  the  transmission  or  sale  of  gas 
or  electricity  shall  annually  pay  to  the  state  a  tax  upon  their  franchises, 
roadways,  roadbeds,  rails,  rolling  stock,  poles,  wire,  pipes,,  canals,  con- 
duits, rights  of  way,  and  other  property,  or  any  part  thereof,  used 
exclusively  in  the  operation  of  their  business  in  this  state,  computed  as 
follows :  Said  tax  shall  be  equal  to  the  percentages  hereinafter  fixed  upon 
the  gross  receipts  from  operation  of  such  companies  and  each  thereof 
within  this  state.  When  such  companies  are  operating  partly  within 
and  partly  without  this  state,  the  gross  receipts  within  this  state  shall  be 
deemed  to  be  all  receipts  on  business  beginning  and  ending  within  this 
state,  and  a  proportion,  based  upon  the  proportion  of  the  mileage  within 
this  state  to  the  entire  mileage  over  which  such  business  is  done,  of 
receipts  on  all  business  passing  through,  into,  or  out  of  this  state.  The 
percentages  above  mentioned  shall  be  as  follows:  On  all  railroad  com- 
panies, including  street  railways  four  and  three-fourths  per  cent;  on 
all  sleeping  car,  dining  car,  drawing-room  car,  palace  car  companies, 
refrigerator,  oil,  stock,  fruit,  and  other  car-loaning,  and  other  car  com- 
panies four  per  cent;  on  all  companies  doing  express  business  on  any 


220  INSURANCE   LAWS   OF   CALIFORNIA. 

railroad,  steamboat,  vessel  or  stage  line,  two  per  cent ;  on  all  telegraph 
and  telephone  companies,  four  and  two-tenths  per  cent:  on  all  companies 
engaged  in  the  transmission  or  sale  of  gas  or  electricity,  four  and  six- 
tenths  per  cent.  Such  taxes  shall  be  in  lieu  of  all  other  taxes  and 
licenses,  state,  county,  and  municipal,  upon  the  property  above  enumer- 
ated of  such  companies  except  as  otherwise  provided  in  section  fourteen 
of  article  thirteen  of  the  constitution  of  this  state,  and  as  provided  in 
section  twenty-two  of  article  four  of  said  constitution.  The  word 
''municipal"  as  used  in  this  act  shall  apply  to  incorporated  towns  and 
cities  formed  under  article  eleven  of  the  constitution  of  this  state  and 
to  none  other. 

Amended,  Stats.  1913,  p.  4. 

Tax  on  insurance  companies. 

Sec.  3.  Every  insurance  company  or  association  doing  business  in 
this  state  shall  annually  pay  to  the  state  a  tax  of  one  and  three-fourths 
per  cent  upon  the  amount  of  the  gross  premiums  received  upon  its 
business  done  in  this  state,  less  return  premiums  and  reinsurance  in 
companies  or  associations  authorized  to  do  business  in  this  state;  pro- 
vided, that  there  shall  be  deducted  from  said  one  and  three- fourths  per 
cent  upon  the  gross  premiums  the  amount  of  any  county  and  municipal 
taxes  paid  by  such  companies  on  real  estate  owned  by  them  in  this  state. 
This  tax  shall  be  in  lieu  of  all  other  taxes  and  licenses,  state,  county, 
and  municipal,  upon  the  property  of  such  companies,  except  county  and 
municipal  taxes  on  real  estate,  and  except  as  otherwise  provided  in  the 
constitution  of  this  state;  provided,  t hat  when  by  the  laws  of  any  other 
state  or  country,  any  taxes,  fines,  penalties,  licenses,  fees,  deposits  of 
money,  or  of  securities,  or  other  obligations  or  prohibitions,  are  imposed 
on  insurance  companies  of  this  state,  doing  business  in  such  other  state 
or  country,  or  upon  their  agents  therein,  in  excess  of  such  taxes,  fines, 
penalties,  licenses,  fees,  deposits  of  money,  or  of  securities,  or  other 
obligations  or  prohibitions,  imposed  upon  insurance  companies  of  such 
other  state  or  country,  so  long  as  such  laws  continue  in  force,  the  sain*' 
obligations  and  prohibitions  of  whatsoever  kind  must  be  imposed  by  the 
insurance  commissioner  upon  insurance  companies  of  such  other  state 
or  country  doing  business  in  this  state. 

Amended,  Stats.  1913,  p.  4. 

The  amount  paid  to  the  beneficiary  under  a  return  premium  policy  would  not  be  a 
return  premium  within  the  meaning  of  section  3  of  the  foregoing  act. 

The  amount  paid  to  a  policyholder,  as  the  surrender  value  of  his  policy,  should  be 
deducted  from  the  gross  premium  as  a  return  premium,  it  being  the  return  of  an 
unearned  premium. 

Concerning  mutual  insurance  companies  that  return  at  the  end  of  the  year  the 
amount  not  necessary  for  the  expenses  during  that  year,  we  are  of  the  opinion  that 
the  amount  returned  at  the  end  of  the  year  as  not  necessary  for  the  expenses  of  that 
year  should  be  deducted  as  a  return  premium.  There  seems  to  be  no  difference 
between  this  and  the  so-called  dividend. 

Regarding  the  so-called  dividend  returned  at  the  end  of  each  year,  I  am  of  the 
opinion  that  this  question  should  be  answered  the  same  as  that  in  reference  to  mutual 
insurance  companies.  If  it  were  a  dividend,  as  we  ordinarily  understand  the  term, 
that  is  to  say.  earnings  distributed  to  the  stockholders  of  the  corporation,  then  clearly 
it  should  be  taxed. 

We  are  of  the  opinion  that  the  true  rule  is  that  the  so-called  dividends  are  to  be 
regarded  as  premiums  returned  as  unused  and  unearned:  Opinion  of  the  Attorney 
general,  Man  8i,    1911. 

Where  the  failure  of  a  foreign  insurance  corporation  doing  business  in  this  state 
to  pay  the  license  tax  required  by  the  state  corporation  license  tax  act  within  the  time 
provided  therefor  would  result  in  a  proclamation  declaring  that  it  had  forfeited  its 


TAXATION    OP   INSURANCE    COMPANIES.  221 

rights  and  was  without  further  authority  to  do  business  in  this  state,  the  payment  of 
the  tax  to  prevent  such  a  threatened  result  and  under  a  written  protest,  is  involun- 
tary, and  can  he  recovered  hack  if  the  exaction  is  illegal. 

Under  the  provisions  of  section  14  of  article  XIII  of  the  constitution,  adopted 
November  8,  1913,  insurance  companies  doing  business  in  this  state  are  exempted 
from  payment  of  the  license  tax  exacted  by  the  state  corporation  license  tax  of  1905. 

Such  conclusion  is  warranted  by  the  clause  of  the  section  declaring  that  the  specific 
percentage  of  gross  premiums  required  to  be  paid  by  insurance  companies  "shall  be  in 
lieu  of  all  other  taxes  and  licenses,  state,  county  and  municipal  upon  the  property  of 
such  companies."     (Hartford  Fire  /us.  Co.  vs.  Jordan,  47  C.  D.  page  175.) 

Tax  on  state  and  national  banks. 

Sec.  4.  The  shares  of  capital  stock  of  all  banks,  organized  under 
the  laws  of  this  state,  or  of  the  United  States,  or  of  any  other  state  and 
located  in  this  state,  shall  be  assessed  and  taxed  to  the  owners  or  holders 
thereof  by  the  state  board  of  equalization  in  the  manner  hereinafter 
provided,  in  the  city  or  town  where  the  bank  is  located  and  not  else- 
where. There  shall  be  levied  and  assessed  upon  such  shares  of  capital 
stock  an  annual  tax,  payable  to  the  state,  of  one  per  centum  upon  the 
value  thereof.  The  value  of  each  share  of  stock  in  each  bank,  except  such 
as  are  in  liquidation,  shall  be  taken  to  be  the  amount  paid  in  thereon, 
together  with  its  pro  rata  of  the  accumulated  surplus  and  undivided 
profits.  The  value  of  each  share  of  stock  in  each  bank  which  is  in 
Liquidation  shall  be  taken  to  be  its  pro  rata  of  the  actual  assets  of  such 
bank.  This  tax  shall  be  in  lieu  of  all  other  taxes  and  licenses,  state, 
county,  and  municipal,  upon  such  shares  of  stock  and  upon  the  property 
of  such  bank,  except  county  and  municipal  taxes  on  real  estate  and 
except  as  otherwise  provided  in  the  constitution  of  this  state.  In  deter- 
mining the  value  of  the  capital  stock  of  any  bank  there  shall  be  deducted 
from  the  value,  as  defined  above,  the  value,  as  assessed  for  county  taxes, 
of  any  real  estate,  other  than  mortgage  interests  therein,  owned  by  such 
bank  and  taxed  for  county  purposes.  The  banks  shall  be  liable  to  the 
state  for  this  tax  and  the  same  shall  be  paid  to  the  state  by  them  on 
behalf  of  the  stockholders  in  the  manner  and  at  the  time  hereinafter 
provided,  and  they  shall  have  a  lien  upon  the  shares  of  stock  and  upon 
any  dividends  declared  thereon  to  secure  the  amount  so  paid.  The 
moneyed  capital,  reserve,  surplus,  undivided  profits,  and  all  other 
property  belonging  to  unincorporated  banks  or  bankers  of  this  state,  or 
held  by  any  bank  located  in  this  state  which  has  no  shares  of  capital 
stock,  or  employed  in  this  state  by  any  branches,  agencies,  or  other  repre- 
sentatives of  any  banks  doing  business  outside  of  the  State  of  California, 
shall  be  likewise  assessed  and  taxed  to  such  banks  or  bankers  by  the  said 
board  of  equalization,  in  the  same  manner  as  above  provided  for  incor- 
porated banks,  and  taxed  at  the  same  rate  that  is  levied  upon  the  shares 
of  capital  stock  of  incorporated  banks,  as  provided  in  the  first  paragraph 
of  this  section.  In  the  case  of  a  branch,  an  agency,  or  other  representa- 
tive of  any  bank  doing  business  outside  of  this  state,  the  capital  of  said 
branch,  agency,  or  representative  used  in  this  state  shall  be  taken  to  be 
the  average  amount  owed  by  the  said  branch,  agency,  or  representative 
to  the  bank  of  which  it  is  a  branch,  agency,  or  representative  during  the 
year  ending  the  first  Monday  in  March.  The  value  of  said  property  shall 
be  determined  by  taking  the  entire  property  invested  in  such  business, 
together  with  all  reserve,  surplus,  and  undivided  profits,  at  their  full 
cash  value,  and  deducting  therefrom  the  value  as  assessed  for  county 
taxes  of  any  real  estate,  other  than  mortgage  interests  therein,  owned 


222  INSURANCE   LAWS   OF   CALIFORNIA. 

by  such  bank  or  banker  and  taxed  for  county  purposes.  Such  taxes 
shall  be  in  lieu  of  all  other  taxes  and  licenses,  state,  county,  and 
municipal,  upon  the  property  of  the  banks  and  bankers  mentioned  in 
this  section,  except  county  and  municipal  taxes  on  real  estate,  and  except 
as  otherwise  provided  in  the  constitution  of  this  state.  All  moneyed 
capital  and  property  of  the  banks  and  bankers  mentioned  in  this  para- 
graph shall  be  assessed  and  taxed  at  the  same  rate  as  an  incorporated 
bank,  provided  for  in  this  section.  In  determining  the  value  of  the 
moneyed  capital  and  property  of  the  banks  and  bankers  mentioned  in 
this  section,  the  said  state  board  of  equalization  shall  include  and  assess 
to  such  banks  all  property  and  everything  of  value  owned  or  held  by 
them  which  would  go  to  make  up  the  value  of  the  capital  stock  of  such 
banks  and  bankers,  if  the  same  were  incorporated  and  had  shares  of 
capital  stock.  The  word  " banks"  as  used  in  this  act  shall  include 
banking  associations,  unincorporated  banks  and  bankers,  branches, 
agencies  or  other  representatives  of  any  banks  doing  business  outside  of 
the  State  of  California,  savings  and  loan  societies,  and  such  trust  com- 
panies as  conduct  the  business  of  receiving  money  on  deposit,  but  shall 
not  include  building  and  loan  associations. 
Amended,  Stats.  1913,  p.  5. 

Tax  on  franchises. 

Sec.  5.  All  franchises,  other  than  those  of  the  companies  mentioned 
in  sections  two,  three  and  four  of  this  act,  shall  be  assessed  at  their 
actual  cash  value,  after  making  due  deduction  for  good  will,  in  the 
manner  hereinafter  provided,  and  shall  be  taxed  at  the  rate  of  one  per 
centum  each  year,  and  the  taxes  collected  thereon  shall  be  exclusively 
for  the  benefit  of  the  state.  These  franchises  shall  include  the  actual 
exercise  of  the  right  to  be  a  corporation  and  to  do  business  as  a  corpora- 
tion under  the  laws  of  this  state  and  the  actual  exercise  of  the  right  to  do 
business  as  a  corporation  in  this  state  when  such  right  is  exercised  by 
a  corporation  incorporated  under  the  laws  of  any  other  state  or  country, 
also  the  right,  authority,  privilege,  or  permission  to  maintain  wharves, 
ferries,  toll  roads,  and  toll  bridges,  and  to  construct,  maintain  or 
operate,  in,  under,  above,  upon,  through  or  along  any  streets,  highways, 
public  places,  or  waters,  any  mains,  pipes,  canals,  ditches,  tanks,  con- 
duits or  other  means  for  conducting  water,  oil,  or  other  substances. 

Amended,  Stats.  1913,  p.  6. 

Municipal  charges  for  special  franchises  not  released. 

Sec.  6.  Nothing  in  this  act  shall  be  construed  to  release  any  com- 
pany from  the  payment  of  any  amount  agreed  to  be  paid  or  required  by 
law  to  be  paid,  now  or  hereafter,  for  any  special  privilege  or  franchise 
granted  by  any  of  the  municipal  authorities  of  this  state. 

"Gross  receipts  from  operation"  defined. 

Sec.  7.  The  term  "gross  receipts  from  operation"  as  used  in  section 
two  of  this  act  is  hereby  defined  to  include  all  sums  received  from  busi- 
ness done  within  this  state,  during  the  year  ending  the  thirty-first  day 
of  December  last  preceding,  including  the  company's  proportion  of 
gross  receipts  from  any  and  all  sources  on  account  of  business  done  by 
it  within  this  state,  in  connection  with  other  companies  described  in 
section  two  of  this  act. 


TAXATION   OF   INSURANCE   COMPANIES.  223 

In  case  of  companies  operating  partly  within  and  partly  without  this 
state,  the  gross  receipts  within  this  state  shall  be  deemed  to  be  all- 
receipts  on  business  beginning  and  ending  within  this  state,  and  the 
proportion  based  upon  the  proportion  of  the  mileage  within  this  state  to 
the  entire  mileage  over  which  such  business  is  done,  of  receipts  on  all 
business  passing  through,  into  or  out  of  this  state. 

No  deduction  shall  be  allowed  from  the  gross  receipts  from  operation 
for  commissions,  rebates,  or  other  repayments,  except  only  such  refunds 
as  arise  from  errors  or  overcharges ;  nor  shall  any  deduction  be  allowed 
for  payments  from  gross  receipts  to  other  companies  for  any  purpose 
whatsoever,  except  such  refunds  as  arise  from  errors  or  overcharges. 

Income  derived  from  property  not  denned  in  this  act  as  operative 
property  shall  not  be  included  in  the  gross  receipts  for  the  purpose  of 
determining  the  tax  on  the  property  and  franchises  provided  for  in 
section  two  of  this  act. 

"Operative  property"  defined. 

Sec.  8.  1.  The  term  "operative  property' '  as  used  in  this  act  shall 
include : 

(a)  In  the  case  of  railroad  companies,  including  street  railways:  The 
franchises,  roadway,  roadbed,  rails,  rolling  stock,  rights  of  way,  sidings, 
spur  tracks,  switches,  signal  systems,  cranes  and  structures  used  in 
loading  and  unloading  cars,  fences  along  the  right  of  way,  poles,  wires, 
conduits,  power  lines,  piers,  used  exclusively  in  the  operation  of  the 
railroad  business,  depot  grounds  and  buildings,  ferry  boats,  tugs  and 
ear-floats  used  exclusively  in  the  operation  of  the  railroad  business; 
machine  shops,  repair  shops,  round  houses,  car  barns,  power  houses, 
substations,  and  other  buildings,  used  in  the  operation  of  the  railroad 
business  and  so  much  of  the  land  on  which  said  shops,  houses,  barns,  and 
other  buildings  are  situate  as  may  be  required  for  the  convenient  use 
and  occupation  of  said  buildings. 

(b)  In  the  case  of  sleeping  car,  dining  car,  drawing-room  car  and 
palace  car  companies,  refrigerator,  oil,  stock,  fruit,  and  other  car-loan- 
ing, and  other  car  companies  operating  upon  railroads  in  this  state: 
The  franchises,  cars,  and  other  rolling  stock. 

(c)  In  the  case  of  companies  doing  express  business  on  any  railroad, 
steamboat,  vessel,  or  stage  line  in  this  state:  The  franchises,  cars, 
trucks,  wagons,  horses,  harness,  and  safes. 

(d)  In  the  case  of  telegraph  and  telephone  companies  doing  business 
in  this  state :  The  franchises,  rights  of  way,  poles,  wires,  pipes,  conduits, 
cables,  switchboards,  telegraph  and  telephone  instruments,  batteries, 
generators,  and  other  electrical  appliances,  and  exchange  and  other 
buildings  used  in  the  telegraph  and  telephone  business  and  so  much  of 
the  land  on  which  said  buildings  are  situate  as  may  be  required  for  the 
convenient  use  and  occupation  of  said  buildings. 

(e)  In  the  case  of  companies  engaged  in  the  transmission  or  sale  of 
gas  or  electricity:  The  franchises,  towers,  poles,  wires,  pipes,  canals, 
tunnels,  ditches,  flumes,  aqueducts,  conduits,  rights  of  way,  dams, 
reservoirs,  water  and  water  rights  used  exclusively  in  the  business  of 
the  transmission  or  sale  of  gas  or  electricity ;  transformers,  substations, 
gas-holders,  gas  and  electric  generators,  switches,  switchboards,  meters, 
electrical  and  gas  appliances,  oil  tanks,  power  plants,  power  houses,  and 


224  INSURANCE   LAWS   OF    CALIFORNIA. 

other  buildings  and  structures  used  in  the  operation  of  the  business  of 
the  transmission  or  sale  of  gas  or  electricity  and  so  much  of  the  land 
on  which  said  buildings  and  structures  are  situate  as  may  be  required 
for  the  convenient  use  and  operation  of  said  buildings;  provided,  that 
the  operative  property  of  the  companies  enumerated  in  this  section, 
shall  also  include  any  other  property  not  above  enumerated  that  may  be 
reasonably  necessary  for  use  by  said  companies  exclusively  in  the 
operation  and  conduct  of  the  particular  kinds  of  business  enumerated 
in  section  two  of  this  act.  The  operative  property  mentioned  in  sub- 
divisions (a),  (b),  (c),  (d),  and  (e),  of  this  section  shall  not  be  subject 
to  taxation  for  county,  municipal,  or  district  purposes  except  as  other- 
wise provided  for  in  the  constitution  and  laws  of  this  state;  provided, 
however,  that  when  any  piece  or  parcel  of  property  in  this  state  owned 
by  any  of  the  companies  mentioned  in  section  two  of  this  act  is  used 
partially  by  such  company  for  any  use  reasonably  necessary  to  the 
operation  of  any  of  the  lines  of  business  enumerated  in  section  two  of 
this  act,  and  such  property  is  also  partially  rented  to  or  used  by  others 
or  is  partially  used  by  the  company  for  some  other  lines  of  business  not 
among  those  so  enumerated,  or  for  purposes  not  reasonably  necessary 
to  the  operation  of  any  of  said  enumerated  lines  of  business  it  shall  be 
considered  operative  property  in  that  proportion  only  which  that  part 
of  the  property  mentioned  in  this  proviso  used  by  the  company  in  the 
operation  of  any  of  said  enumerated  lines  of  business  bears  to  the  whole 
of  the  property  mentioned  in  this  proviso. 

2.  Any  property  of  the  classes  mentioned  in  this  section  owned  by  a 
company  constructing  a  new  railroad,  street  railway,  telegraph  or  tele- 
phone system,  or  plant  or  system  for  the  transmission  or  sale  of  gas  or 
electricity,  no  part  of  which  new  road,  line,  plant,  or  system  is  in  opera- 
tion, and  the  same  classes  of  property  when  held  by  an  operating  com- 
pany solely  for  the  construction  of  a  new  railroad  or  railway  line,  a 
new  telegraph  or  telephone  system,  or  a  new  plant  or  system  for  the 
transmission  or  sale  of  gas  or  electricity,  and  not  to  be  used  for  better- 
ments or  additions  to  roads,  lines,  plants,  or  systems  already  under 
operation,  shall  not  be  considered  operative  property  and  shall  be  sub- 
ject to  assessment  and  taxation  for  county,  municipal,  and  district  pur- 
poses. Any  part  of  such  property  of  any  company  mentioned  in  this 
section  shall  be  classed  and  assessed  as  operative  property  when  the 
state  board  of  equalization  shall  determine  that  such  property  is  render- 
ing a  substantial  public  service. 

3.  When  any  property  in  this  state  belonging  to  a  company  of  the 
classes  named  in  this  section  is  rendering  no  service  to  the  public  in 
this  state,  even  though  it  may  be  rendering  service  to  the  public  in  some 
other  state  or  states,  such  property  shall  not  be  considered  as  operative 
property,  and  shall  be  subject  to  assessment  and  taxation  for  county, 
municipal,  and  district  purposes. 

4.  The  state  board  of  equalization  shall  have  power  to  make  rules  and 
issue  instructions  not  inconsistent  with  the  constitution  and  laws  of  this 
state  for  the  guidance  of  assessors  in  determining  what  is  operative 
property  and  what  is  non-operative  property  of  companies  named  in 
this  section. 

Amended,  Stats.  1913,  p.  615. 


TAXATION    OF   INSURANCE    COMPANIES.  225 

Report  of  public  service  companies. 

Sec.  9.  Such  person  or  officer,  as  the  state  board  of  equalization  may 
designate,  of  each  of  the  companies  mentioned  in  section  two  of  this  act, 
shall  within  ten  days  after  the  first  Monday  in  March  of  each  year,  file 
with  the  said  board  a  report  signed  and  sworn  to  by  one  or  more  of  said 
persons  or  officers,  showing  in  detail  for  the  year  ending  the  thirty-first 
day  of  December  last  preceding,  the  various  items  as  follows : 

1.  The  name  of  the  company,  its  nature,  whether  a  person  or  persons, 
a  partnership  (with  names  of  partners),  an  association,  or  corporation, 
and  under  the  laws  of  what  state,  territory  or  country  organized,  the 
nature  of  its  business,  the  location  of  its  principal  place  of  business, 
the  names  and  post-office  addresses  of  its  president,  secretary,  auditor, 
treasurer,  superintendent,  and  general  manager,  the  location  of  its 
principal  place  of  business  in  this  state,  the  name  and  post-office  address 
of  its  chief  officer  or  managing  agent  in  this  state,  and  the  names  and 
addresses  of  all  subsidiary  companies  whose  property  and  business  are 
operated  by  it  and  the  names  and  addresses  of  any  company  of  which 
it  may  be  subsidiary. 

2.  Each  of  the  companies  mentioned  in  section  two  of  this  act  shall 
report,  in  such  detail  as  the  state  board  of  equalization  shall  prescribe, 
all  of  its  property  in  this  state  which  comes  under  the  definition  of 
operative  property  in  section  eight  of  this  act.  When  any  such  com- 
pany operates  both  within  and  without  this  state  it  shall  report  the 
mileage  over  which  it  operates  both  within  and  without  this  state.  It 
shall  also  report  the  location  of  said  property  within  this  state  by 
counties,  cities  and  counties,  municipalities,  and  districts,  in  such  man- 
ner and  in  such  detail  as  said  board  of  equalization  shall  prescribe.  It 
shall  also,  at  the  same  time,  furnish  a  duplicate  of  the  report  covering 
so  much  of  said  property  as  is  located  in  any  county,  city  and  county, 
municipality,  or  district,  to  the  assessor  of  the  county,  city  and  county, 
city,  or  district  in  which  such  property  is  located.  The  state  board  of 
equalization  may  require  the  filing  in  its  office  of  maps  descriptive  of  all 
the  operative  property  of  any  such  companies,  and  may  prescribe  the 
form  and  size  of  such  maps  and  the  details  to  be  shown  therein,  and 
may  require  that  similar  maps  descriptive  of  the  operative  property 
within  each  county,  city  and  county,  municipality,  or  district,  shall  be 
filed  in  the  assessor's  office  in  each  county,  city  and  county,  city,  or  dis- 
trict in  which  any  of  said  property  is  located. 

3.  The  amount  of  capital  stock  issued,  and  the  amount  of  money 
received  therefor,  showing  separately  the  capital  stock  issued  and  the 
money  received  therefor  of  the  operating  company  and  of  each  subsid- 
iary company  in  this  state. 

4.  The  dividends  paid  during  the  year  ending  the  thirty-first  day  of 
December  last  preceding,  the  surplus  fund,  if  any,  on  said  thirty-first 
day  of  December,  or  between  such  periods  as  the  state  board  of  equaliza- 
tion may  determine,  those  of  the  operating  company  and  of  each  subsid- 
iary  company  in  this  state  to  be  shown  separately. 

5.  The  funded  and  floating  debts  and  the  rate  of  interest  thereon, 
showing  separately  the  debts  of  the  operating  company  and  of  each 
subsidiary  company  in  this  state,  on  the  thirty-first  day  of  December 
last  preceding. 

15—10098 


226  INSURANCE   LAWS   OF   CALIFORNIA. 

6.  The  market  value  of  the  stock  and  of  the  outstanding  bonds,  or, 
when  said  stock  or.bonds  have  no  market  value,  the  actual  value  thereof, 
for  such  periods  and  for  such  dates  as  the  state  board  of  equalization 
shall  prescribe. 

7.  The  amounts  expended  for  improvements  during  the  year  ending 
the  thirty-first  day  of  December  last  preceding,  how  expended  and  the 
character  of  the  improvements. 

8.  The  gross  receipts  from  operation  within  this  state  for  the  year 
ending  the  thirty-first  day  of  December  last  preceding,  the  gross 
receipts  from  such  classes  of  business  as  the  state  board  of  equalization 
may  designate,  to  be  reported  separately;  also,  where  the  property  and 
business  are  partly  within  and  partly  without  this  state,  the  gross 
receipts  for  said  period  on  all  business  beginning  and  ending  entirely 
within  this  state,  and  that  proportion  of  the  gross  receipts  from  all 
business  passing  through,  into,  or  out  of  this  state,  which  the  mileage 
within  this  state  bears  to  the  total  mileage  over  which  such  interstate 
business  is  done  as  further  defined  in  section  seven  of  this  act. 

9.  The  operating  and  other  expenses. 

10.  The  balances  of  profit  and  loss,  between  such  periods  as  the  state 
board  of  equalization  may  determine. 

11.  Such  other  matters  as  the  state  board  of  equalization  may  deem 
necessary  in  order  to  enable  it  to  assess  and  levy  the  taxes  provided  for 
in  section  fourteen  of  article  thirteen  of  the  constitution  of  this  state. 

Each  such  company  shall  include  in  its  report  the  property  and  busi- 
ness of  all  subsidiary  companies  as  that  term  is  hereinafter  defined  in 
this  section,  whose  property  and  business  are  operated  by  it,  whether  by 
virtue  of  a  lease,  an  operating  contract  or  agreement,  or  by  virtue  of 
control  through  the  ownership  of  stock  or  otherwise,  even  though  such 
subsidiary  companies  maintain  an  independent  legal  existence  and  sep- 
arate accounts. 

The  term  " subsidiary  company"  is  hereby  defined  as  applying  to  a 
company  which  is  merged  in  the  operating  system  of  an  operating  com- 
pany in  any  of  the  ways  above  stated,  whose  property  and  franchises 
would  be  taxable  under  section  two  of  this  act  if  the  same  were  operated 
independently.  No  separate  report  need  be  rendered  by  a  subsidiary 
company  whose  property,  franchises,  and  operations  are  fully  and  com- 
pletely covered  by  the  report  of  an  operating  company,  unless  the  state 
board  of  equalization  shall  deem  such  a  separate  report  necessary. 

Each  such  company  operating  the  property  and  business  of  a  subsid- 
iary company  in  some  line  of  business  to  which  a  different  percentage 
of  the  gross  receipts  is  applied  by  section  two  of  this  act  from  that 
applied  by  said  section  two  to  the  gross  receipts  of  the  operating  com- 
pany, shall  report  such  receipts  of  the  subsidiarv  company  separately. 

Amended,  Stats.  1913,  p.  617. 

Assessor  to  report  to  state  board  property  improperly  claimed  as  operative 
property. 

Sec.  10.  If  any  assessor  finds  in  the  report  of  the  operative  prop- 
erty in  his  county,  city  and  county,  municipality,  or  district,  furnished 
to  him  by  any  of  the  companies  as  required  in  section  nine  of  this  act, 
any  piece  or  parcel  of  property  which  he  regards  as  non -operative  prop- 
erty, or  partially  operative  and  partially  non-operative,  he  shall,  within 


TAXATION   OP   INSURANCE   COMPANIES.  227 

thirty  days  after  receiving  such  report,  notify  the  state  board  of  equal- 
ization thereof  by  mail,  which  notice  shall  contain  a  general  description 
of  the  property  and  the  assessor's  reasons  for  regarding  the  same  as 
non-operative  property.  He  shall  also  mail  a  copy  of  the  notice  to  the 
company  whose  property  is  involved.  The  said  board  shall  investigate 
the  nature  of  the  property  and  its  use,  and,  if  an  agreement  between 
the  said  board,  the  assessor,  and  the  company  as  to  the  property  classi- 
fication of  such  property  can  not  be  reached,  then  the  said  board  shall, 
under  such  rules  of  notice  as  it  may  deem  reasonable,  set  a  date  for  a 
hearing,  at  which  the  assessor  and  the  company  may  be  present  or  rep- 
resented. At  such  hearing  the  board  shall,  from  the  evidence  presented 
and  from  the  best  information  it  can  obtain,  decide  the  matter  in  dis- 
pute, and  determine  whether  such  property  is  operative  or  non-operative 
or  in  what  proportion  operative  and  in  what  proportion  non-operative. 
The  said  board  shall  enter  its  decision  in  its  minutes,  and  shall  send  a 
copy  thereof  to  the  assessor  and  the  company,  and  also  to  the  proper 
officer  of  any  city  affected  thereby.  Said  decision  shall  be  binding 
upon  all  parties,  the  state,  the  county,  city  and  county,  municipality, 
or  district,  and  the  company,  unless  set  aside  by  a  court  of  competent 
"jurisdiction,  and  each  such  assessor  must  note  the  decision  on  his  assess- 
ment roll,  and  must  assess  such  property  accordingly. 

If  the  state  board  of  equalization  shall  find  in  the  report  of  operative 
property  furnished  to  said  board  by  any  company  under  the  provisions 
of  section  nine  of  this  act,  any  piece  or  parcel  of  property  which  said 
board  regards  as  non-operative  property,  or  partially  operative  and  par- 
tially  non-operative,  the  board  shall,  within  thirty  days  after  receiving 
such  report,  notify  said  company  thereof  in  writing,  which  notice  shall 
contain  a  general  description  of  the  property  and  the  reasons  for  re- 
garding the  same  as  non-operative.  It  shall  also  mail  a  copy  of  the 
notice  to  any  assessor  in  whose  county,  city  and  county,  municipality,  or 
district  the  property  is  located.  If  an  agreement  between  the  said  board, 
the  assessor,  and  the  company  as  to  the  proper  classification  of  such 
property  can  not  be  reached,  then  the  said  board  shall,  under  such  rules 
of  notice  as  it  may  deem  reasonable,  set  a  date  for  a  hearing,  at  which 
the  assessor  and  the  company  may  be  present  or  represented.  At  s  ch 
hearing  the  board  shall,  from  the  evidence  presented  and  from  the  I  jst 
information  it  can  obtain,  decide  the  matter  in  dispute,  and  determine 
whether  such  property  is  operative  or  non-operative,  or  in  what  propor- 
tion operative  and  in  what  proportion  non-operative.  The  said  board 
shall  enter  its  decision  in  its  minutes,  and  shall  send  a  copy  thereof  to 
the  assessor  and  the  company,  and  also  to  the  proper  officer  of  any  city 
affected  thereby.  Said  decision  shall  be  binding  upon  all  parties,  the 
state,  the  county,  city  and  county,  municipality,  or  district,  and  the 
company,  unless  set  aside  by  a  court  of  competent  jurisdiction,  and 
each  such  assessor  must  note  the  decision  on  his  assessment  roll  and 
must  assess  the  property  accordingly. 

Insurance  commissioner  to  report. 

Sec.  11.  The  insurance  commissioner  of  this  state  must  on  or  before 
the  last  day  of  March  in  each  year,  make  and  file  with  the  state  board 
of  equalization  a  report  showing : 

1.  All  companies,  domestic  and  foreign,  and  all  firms,  associations,  or 
persons,  engaged  in  the  business  of  insurance  in  this  state. 


228  INSURANCE   LAWS   OP   CALIFORNIA. 

2.  The  total  amount  of  the  gross  premiums  received  from  its  business 
in  this  state  by  each  of  said  companies,  firms,  associations,  and  persons 
during  the  year  ending  the  thirty-first  day  of  December  last  preceding. 

3.  The  amount  of  return  premiums  paid  on  business  done  in  this  state 
and  the  amount  of  reinsurance  on  business  done  in  this  state  paid  to 
other  insurance  companies  or  associations  authorized  to  do  business  in 
this  state,  by  said  companies,  firms,  associations,  and  persons,  during 
said  year. 

4.  The  amount  of  any  county  and  municipal  taxes  paid  during  said 
year  by  such  companies  on  real  estate  owned  by  them  in  this  state,  and 
where  said  real  estate  is  located. 

In  making  this  report  he  shall  list  separately  all  those  companies, 
firms,  associations,  or  persons,  which  under  the  second  proviso  in  subdi- 
vision (b)  of  section  fourteen  of  article  thirteen  of  the  constitution  and 
of  section  three  of  this  act,  are  subject  to  a  tax  at  a  rate  higher  than  one 
and  one  half  per  cent  on  their  gross  premiums,  or  to  any  additional  tax 
or  burden,  and  shall  indicate  in  each  case  the  amount  and  character  of 
said  tax  or  burden. 

Every  company,  firm,  association,  or  person  engaged  in  the  business 
of  insurance  in  this  state  shall  file  with  the  insurance  commissioner  on 
or  before  the  first  Monday  in  March  in  each  year  such  statements  in 
addition  to,  or  in  modification  of,  the  statements  required  to  be  rendered 
under  the  provisions  of  article  sixteen  of  chapter  three  of  title  one  of 
part  three  of  the  Political  Code  as  said  insurance  commissioner  shall 
deem  necessary  to  enable  him  to  prepare  the  report  required  of  him  in 
this  section  and  said  statements  shall  be  verified  in  the  same  manner 
as  is  provided  for  the  verification  of  other  statements  by  insurance 
companies  in  section  six  hundred  and  ten  of  the  Political  Code,  except 
that,  those  filed  by  foreign  companies  shall  be  verified  by  the  oath  of 
the  manager  thereof  residing  within  this  state. 

Bank  reports. 

Sec.  12.  The  president,  secretary,  treasurer,  cashier,  or  such  other 
officer  as  the  state  board  of  equalization  may  determine,  of  every  bank 
referred  to  in  section  fourteen  of  article  thirteen  of  the  constitution  of 
this  state,  shall  on  the  first  Monday  in  March  or  within  ten  days  there- 
after make  and  file  with  the  state  board  of  equalization  a  sworn  state- 
ment showing  the  condition  of  said  bank  at  the  close  of  business  on  the 
first  Monday  in  March,  and  showing  the  amount  of  its  authorized  capital 
stock,  the  number  of  shares  issued  and  the  par  value  thereof,  the  amount 
received  for  stock  issued,  the  amount  of  its  surplus  and  undivided 
profits,  if  any,  a  complete  list  of  the  names  and  residences  of  its  stock- 
holders and  the  number  of  shares  held  by  each  as  of  record  on  the  books 
of  the  bank  at  the  close  of  business  on  the  first  Monday  in  March;  or, 
in  the  case  of  unincorporated  banks  and  bankers,  of  banks  having  no 
capital  stock  and  of  branches,  agencies,  or  other  representatives  of  banks 
doing  business  outside  of  this  state,  the  moneyed  capital,  reserve,  sur- 
plus, undivided  profits,  and  other  taxable  property,  as  further  defined 
in  section  fourteen  of  article  thirteen  of  the  constitution  of  this  state, 
used  by  them  in  the  banking  business  in  this  state,  also  a  description  of 
the  real  estate,  other  than  mortgage  interests  therein,  and  the  value  of 
each  piece  thereof  as  assessed  for  the  purpose  of  county  taxation  for  the 
then  current  fiscal  year.    Branches,  agencies,  or  other  representatives  of 


TAXATION   OF   INSURANCE    COMPANIES.  229 

banks  doing  business  outside  of  this  state,  shall  report  the  average 
amount  owed  by  said  branches,  agencies,  or  other  representatives,  to 
the  banks  of  which  they  are  branches,  agencies,  or  representatives,  dur- 
ing the  year  ending  the  first  Monday  in  March,  also  a  description  of  the 
real  estate  other  than  mortgage  interests  therein,  and  the  value  of  each 
piece  thereof  as  assessed  for  the  purpose  of  county  taxation  for  the  then 
current  fiscal  year.  The  state  board  of  equalization  shall  prescribe  the 
form  of  reports,  the  manner  of  their  verification,  and  may  require  the 
submission  of  tax  receipts,  or  copies  thereof  certified  to  be  correct  by 
any  notary  public,  in  order  to  verify  the  statements  as  to  the  assessed 
value  of  the  real  estate,  and  may  require  such  further  information  or 
statements  as  said  board  may  deem  necessary. 

Secretary  of  state  to  report  corporations,  etc. 

Sec.  13.  The  secretary  of  state  shall  before  the  first-  day  of  April 
in  the  year  one  thousand  nine  hundred  and  eleven  report  to  the  state 
board  of  equalization  the  names,  principal  place  of  business,  date  of 
incorporation,  term  of  existence,  number  of  charter,  and  the  funded 
debt  if  any,  and  the  then  authorized  capital  stock  of  all  corporations 
whether  formed  under  the  laws  of  this  state  or  of  some  other  state  or 
country,  a  copy  of  whose  articles  of  incorporation  is  on  file  in  his  office, 
and  which  are  authorized  to  do  business  in  this  state,  and  at  such  times 
thereafter  and  as  often  as  the  state  board  of  equalization  shall  deter- 
mine, report  to  said  board  the  same  information  concerning  all  new 
corporations  whether  formed  under  the  laws  of  this  state  or  of  any  other 
state  or  country  a  copy  of  whose  articles  of  incorporation  shall  have 
been  filed  in  his  office  together  with  the  amount  of  the  capital  stock 
thereof  and  also  the  names  and  principal  place  of  business  of  all  corpo- 
rations filing  designation  of  agents  or  certificates  of  increase  or  decrease 
of  capital  stock  in  his  office  with  the  amount  of  the  increase  or  decrease 
of  the  capital  stock  thereof. 

Owners  of  franchises  to  report. 

Sec.  14.  The  owner  or  holder  of  every  franchise  subject  to  taxation 
as  provided  in  section  five  of  this  act,  shall  within  ten  days  after  the 
first  Monday  in  March  in  each  year  make  a  written  report  to  the  state 
board  of  equalization,  signed  and  sworn  to  by  the  holder  or  owner  him- 
self, if  an  individual,  or  by  one  of  the  copartners  if  such  owner  or  holder 
is  a  copartnership,  or  by  the  president  or  vice-president  and  the  treas- 
urer or  secretary  if  the  owner  is  a  corporation,  containing  such  a  concise 
statement  or  description  of  every  franchise  possessed  or  enjoyed  on  said 
day  by  such  owner  or  holder,  as  the  state  board  of  equalization  may 
prescribe,  a  copy  of  the  law,  grant,  ordinance,  or  contract  under  which 
the  same  is  held,  or  if  possessed  or  enjoyed  under  a  general  law,  a  ref- 
erence to  such  law,  a  statement  of  any  condition,  obligation,  or  burden 
imposed  upon  such  franchise,  or  under  which  the  same  is  enjoyed,  and 
containing  also: 

1.  The  name  of  the  company,  its  nature,  whether  a  person  or  persons, 
a  partnership  (with  names  of  partners),  an  association,  or  corporation, 
and  under  the  laws  of  what  state,  territory,  or  country  organized,  the 
nature  of  its  business,  the  location  of  its  principal  place  of  business, 
the  names  and  post-office  addresses  of  its  president,  secretary,  auditor, 
treasurer,  superintendent,  and  general  manager,  the  location  of  its  prin- 


230  INSURANCE   LAWS   OF   CALIFORNIA. 

eipal  place  of  business  in  this  state,  the  name  and  post-office  address  of 
its  chief  officer  or  managing  agent  in  this  state,  and  the  names  and 
addresses  of  all  subsidiary  companies  whose  property  and  business  are 
operated  by  it. 

2.  The  amount  of  its  authorized  capital  stock,  the  amount  thereof 
issued  and  outstanding  on  the  first  Monday  in  March,  and  the  amount 
paid  in  thereon  or  the  value  of  the  property  received  therefor. 

3.  The  funded  and  floating  debts  and  the  interest  paid  thereon 
si  lowing  separately  the  debts  of  the  operating  company  and  of  any 
subsidiary  companies  in  this  state  on  the  thirty-first  day  of  December 
last  preceding. 

4.  The  market  value  of  the  stock  and  of  the  outstanding  bonds,  or, 
when  said  stock  or  bonds  have  no  market  value,  the  actual  value  thereof, 
for  such  periods  and  for  such  dates  as  the  state  board  of  equalization 
shall  prescribe.  • 

5.  The  assessed  value  of  its  property  as  shown  by  the  last  completed 
assessment  roll  in  each  county,  city  and  county,  and  city  in  the  state 
for  the  purposes  of  taxation,  and  if  any  property  of  such  corporation 
be  assessed  and  taxed  outside  of  the  State  of  California,  the  place  where 
assessed,  the  amount  of  such  assessment  and  taxes  there  paid  the  current 
fiscal  year. 

5a.  The  market  and  actual  value  of  all  non-assessable  real  and  per- 
sonal property  owned  by  such  company. 

5b.  The  amount  and  actual  value  of  all  of  said  real  and  personal 
property  referred  to  in  the  last  two  preceding  sections,  that  is  owned 
and  possessed  by  the  company  at  the  date  of  its  report ;  also,  the  amount 
and  actual  value  of  any  other  and  additional  real  or  personal  property 
owned  by  the  company  at  the  date  of  said  report. 

6.  The  dividends  paid  during  the  year  ending  the  thirty-first  day  of 
December  last  preceding,  the  surplus  fund,  if  any,  on  said  thirty-first 
day  of  December,  or  between  such  periods  as  the  state  board  of  equaliza- 
tion may  determine.  Those  of  the  operating  company  and  of  each 
subsidiary  company  in  this  state  to  be  shown  separately. 

7.  The  gross  receipts  from  all  sources  for  the  year  ending  the  thirty- 
first  day  of  December  last  preceding,  from  the  entire  property  and 
business,  the  gross  receipts  from  such  classes  of  business  as  the  state 
board  may  designate,  to  be  reported  separately;  also,  the  total  gross 
receipts  from  intrastate  business  and  from  interstate  business  so  far  as 
the  same  relate  to  this  state,  the  same  to  be  separately  stated. 

8.  The  operating  and  other  expenses. 

9.  The  balances  of  profit  and  loss,  between  such  periods  as  the  state 
board  of  equalization  may  determine. 

10.  Such  other  matters  as  the  state  board  of  equalization  may  deem 
necessary  in  order  to  enable  it  to  assess  and  levy  the  taxes  provided  for 
in  section  fourteen  of  article  thirteen  of  the  constitution  of  this  state. 
The  state  board  of  equalization  shall  ascertain  and  determine  from  the 
foregoing  reports  or  from  the  best  information  it  can  obtain  the  actual 
cash  value  on  the  first  Monday  in  March  of  each  such  franchise,  and 
.shall  assess  and  levy  the  taxes  thereon  in  accordance  with  the  pro- 
visions of  subdivision  (d)  of  section  fourteen  of  article  thirteen  of  the 
constitution  of  this  state. 

Stats.  1913,  p.  619. 


TAXATION    OP   INSURANCE    COMPANIES.  231 

Assessor  to  report  to  state  board. 

Sec.  15.  Every  assessor  or  auditor  shall,  in  the  manner,  at  the  times, 
and  for  the  year  required  by  the  state  board  of  equalization,  report  to 
said  board  upon  such  forms  as  may  be  prescribed  by  said  board  the 
valuation  placed  by  him  upon  the  property  of  any  company  subject  to 
an  assessment  upon  its  franchise  under  the  provisions  of  this  act. 

Arbitrary  assessment  in  case  of  failure  or  refusal  to  report. 

Sec.  16.  If  any  company  mentioned  in  section  one  of  this  act  shall 
Tail  or  refuse  to  furnish  to  the  state  board  of  equalization  within  the 
time  prescribed  in  this  act  the  verified  report  provided  for  in  this  act, 
the  state  board  of  equalization  must  note  such  failure  or  refusal  in  the 
record  of  assessments  for  state  taxes  hereinafter  in  this  act  provided 
for,  and  must  make  an  estimate  of  the  amount  of  the  gross  receipts, 
gross  premiums,  value  of  the  shares  of  capital  stock,  or  value  of  the 
franchises,  of  such  company  and  must  assess  the  same  at  the  amount 
thus  estimated,  which  assessment  shall  be  the  assessment  upon  which  the 
taxes  upon  the  property  or  franchise  of  the  company  for  such  year  shall 
vied  and  collected  as  provided  for  in  this  act.  And  if  in  the  suc- 
ceeding year  any  such  company  shall  again  fail  or  refuse  to  furnish  the 
verified  report  required  by  this  act,  the  state  board  shall  make  an 
estimate  of  the  amount  of  the  gross  receipts,  gross  premiums,  value  of 
tlic  shares  of  capital  stock,  or  value  of  the  franchise  of  such  company, 
which  estimate  shall  not  be  less  than  twice  the  amount  of  the  estimate 
made  by  said  board  in  the  previous  year,  and  shall  note  such  failure  or 
refusal  as  above  provided,  and  the  said  estimate  so  made  shall  be  the 
assessment  upon  which  the  taxes  upon  the  property  or  franchise  of  the 
company  for  such  year  shall  be  levied  and  collected  ay  provided  for  in 
this  act.  In  case  of  each  succeeding  consecutive  failure  or  refusal  the 
said  board  shall  follow  the  same  procedure  until  a  true  statement  shall 
be  furnished. 

Any  company  failing  or  refusing  to  make  and  furnish  any  report  pre- 
scribed in  this  act  or  rendering  a  false  or  fraudulent  report  shall  be 
guilty  of  a  misdemeanor  and  subject  to  a  fine  of  not  less  than  three 
hundred  dollars  and  not  exceeding  five  thousand  dollars  for  each  such 
offense. 

Any  person  required  to  make,  render,  sign,  or  verify  any  report,  who 
makes  any  false  or  fraudulent  report,  with  intent  to  defeat  or  evade  the 
assessment  required  by  this  act  to  be  made,  shall  be  guilty  of  a  mis- 
demeanor, and  shall  for  each  such  offense  be  fined  not  less  than  three 
hundred  dollars  and  not  more  than  five  thousand  dollars,  or  be  impris- 
oned not  exceeding  one  year  in  the  county  jail  of  the  county,  where  said 
report  was  verified,  or  be  subject  to  both  said  fine  and  imprisonment, 
;ii  1  lie  discretion  of  the  court. 

Extension  of  time  for  filing  report. 

Sec.  17.  The  state  board  of  equalization  may,  for  good  cause  shown, 
by  order  entered  upon  its  minutes,  extend  for  not  exceeding  thirty  days, 
the  lime  fixed  in  this  act  for  filing  any  report  herein  provided  for; 
provided,  however,  that  for  the  year  one  thousand  nine  hundred  and 
eleven  the  said  board  may  extend  the  period  herein  mentioned  for  not 
exceeding  sixty  days. 


232  INSURANCE   LAWS   OF   CALIFORNIA. 

State  board  to  meet  for  assessment. 

Sec.  18.  The  state  board  of  equalization  must  meet  at  the  state 
capitol  on  the  first  Monday  in  March  in  each  year,  and  continue  in  open 
session  from  day  to  day,  Sundays  and  holidays  excepted,  until  the  first 
Monday  in  July.  Between  the  first  Monday  in  March  and  the  third 
Monday  before  the  first  Monday  in  July  the  board  must  assess  and  levy 
the  taxes  as  and  in  the  manner  provided  for  in  this  act  and  in  section 
fourteen  of  article  thirteen  of  the  constitution  of  this  state.  The  assess- 
ments must  be  made  to  the  company,  person,  or  association  owning  or 
operating  the  property  subject  to  said  tax,  or,  in  the  case  of  banks, 
banking  associations,  savings  and  loan  societies  and  trust  companies, 
to  the  stockholders  therein ;  provided,  however,  that  in  the  case  of  banks 
in  liquidation  the  assessment  shall  be  made  to  the  receiver,  trustee  or 
officer  in  charge  of  such  liquidation,  as  the  case  may  be,  as  the  repre- 
sentative of  the  stockholders  thereof.  If  the  name  of  the  owner  is 
unknown  to  the  board,  such  assessment  must  be  made  to  unknown 
owners.  Clerical  errors  occurring  or  appearing  in  the  name  of  any 
company,  person,  association,  or  stockholder  whose  property  is  correctly 
assessed,  or  in  the  making,  or  extension  of  any  assessment  upon  the 
records  of  the  state  board  of  equalization,  which  do  not  affect  the  sub- 
stantial rights  of  the  taxpayer,  shall  not  invalidate  the  assessment: 
provided,  however,  that  if  any  bank  shall  by  resolution  of  its  board  of 
directors,  request  the  state  board  of  equalization  to  assess  to  and  in  the 
name  of  such  bank  so  requesting,  the  entire  taxable  value  of  all  the 
shares  of  the  capital  stock  of  such  bank,  as  determined  by* said  state 
board,  instead  of  assessing  such  shares  to  and  in  the  name  of  the  indi- 
vidual stockholders  or  shareholders  owning  the  same,  and  if  such  bank 
shall  promise  that  it  will,  upon  being  notified  by  said  state  board,  of 
such  assessment  thereof  to  said  bank,  and  of  the  amount  of  taxes  to  be 
paid  upon  such  assessment,  pay  such  taxes  at  the  times  when  taxes 
assessed  and  levied  under  this  act  are  due  and  payable,  which  request  to 
assess  said  bank  and  promise  to  pay  said  tax  shall  be  in  substantially 
the  following  form : 

The  state  board  of  equalization  is  hereby  instructed  to  assess  in  the 
name  of  this  bank  and  not  to  the  individual  stockholders  or  shareholders 
therein,  the  taxable  value  of  all  the  shares  of  capital  stock  in  this  bank 
and  such  bank  hereby  promises  to  pay  to  the  state  treasurer  the  amount 
of  the  tax  levied  upon  such  assessment  when  such  taxes  are  due  and 
payable  under  the  laws  of  this  state. 


By  (here  insert  title  of  official  signing.) 

Then  the  state  board  may  assess  the  capital  stock  to  and  in  the  name 
of  such  bank  and  said  promise  to  pay  the  taxes  shall  be  binding  upon 
such  bank  and  collection  of  such  taxes  from  such  bank  may  be  enforced 
in  the  manner  and  by  the  same  method  as  is  provided  for  the  collection 
of  other  taxes  assessed  and  levied  upon  this  act.  On  the  third  Monday 
before  the  first  Monday  in  July  the  said  board  shall  publish  a  notice 
in  one  daily  newspaper  of  general  circulation  published  at  the  state 
capital,  in  one  daily  newspaper  of  general  circulation  published  in  the 
city  and  county  of  San  Francisco,  and  in  one  daily  newspaper  of  general 
circulation  published  in  the  city  of  Los  Angeles,  that  the  assessment  of 


TAXATION   OP   INSURANCE   COMPANIES.  233 

property  for  state  taxes  has  been  completed,  and  that  the  record  of 
assessments  for  state  taxes  will  be  delivered  to  the  controller  on  the 
first  Monday  in  July,  and  that  if  any  company,  person,  or  association 
is  dissatisfied  with  the  assessment  made  by  the  board,  it  may,  at  any 
time  before  the  taxes  thereon  shall  become  due  and  payable,  apply  to 
the  board  to  have  the  same  corrected  in  any  particular.  The  board 
shall  have  power  at  any  time  on  or  before  the  first  Monday  in  July  to 
correct  the  record  of  assessments  for  state  taxes  and  may  increase  or 
decrease  any  assessment  therein  if  in  its  judgment  the  evidence  pre- 
sented or  obtained  warrants  such  action. 
Amended,  Stats.  1913,  p.  621. 

Record  of  assessments  for  state  taxes. 

Sec.  19.  The  state  board  of  equalization  must  prepare  each  year  a 
book,  in  one  or  more  volumes,  to  be  called  the  "record  of  assessments  for 
state  taxes, ' '  in  which  must  be  entered,  either  in  writing  or  printing,  or 
by  both  writing  and  printing,  each  assessment  and  levy  made  by  said 
board  upon  the  property  and  franchises  mentioned  in  section  one  of 
this  act,  describing  the  property  assessed,  and  such  assessments  shall  be 
classified  and  entered,  in  such  separate  parts  of  said  record  as  the  board 
shall  prescribe.  On  the  first  Monday  in  July  the  secretary  of  the  state 
board  of  equalization  must  deliver  to  the  controller  of  state  the  record 
of  assessments  for  state  taxes,  certified  to  by  the  chairman  and  secretary 
of  the  board,  which  certificate  shall  be  substantially  as  follows : 

"We, ,  chairman,  and ,  secretary,  of  the 

state  board  of  equalization  of  the  State  of  California  do  hereby  certify 
that  between  the  first  Monday  in' March  and  the  first  Monday  in  July, 
19 ,  the  state  board  of  equalization  made  diligent  inquiry  and  exam- 
ination to  ascertain  all  property  and  companies  subject  to  assessment 
and  taxation  for  state  purposes,  as  required  by  the  constitution  of  this 
state;  that  said  board  has  faithfully  complied  with  all  the  duties  im- 
posed upon  it  by  the  constitution  and  laws  of  the  State  of  California ; 
that  said  board  has  not  imposed  any  unjust  or  double  assessment 
through  malice  or  ill  will,  or  otherwise;  nor  allowed  any  company 
or  property  to  escape  a  just  assessment  through  favor  or  reward,  or 
otherwise." 

But  the  failure  to  subscribe  such  certificate  to  such  record  of  assess- 
ments for  state  taxes,  or  any  certificate,  shall  not  in  any  manner  affect 
the  validity  of  any  assessment.  Such  record  of  assessments  shall  con- 
stitute the  warrant  for  the  controller  to  collect  the  taxes  assessed  and 
levied  upon  the  property  and  franchises  mentioned  in  section  one  of 
this  act. 

Sec.  20.  The  taxes  assessed  and  levied  as  provided  in  section  four- 
teen of  article  thirteen  of  the  constitution  of  this  state,  and  in  and  by 
the  provisions  of  this  act,  shall  be  due  and  payable  on  the  first  Monday 
in  July  in  each  year,  and  one  half  hereof  shall  be  delinquent  on  the  sixth 
Monday  after  said  first  Monday  in  July  at  six  o'clock  p.  m.,  and  unless 
paid  prior  thereto,  fifteen  per  cent  shall  be  added  to  the  amount  thereof, 
and  unless  paid  prior  to  the  first  Monday  in  February  next  thereafter 
at  six  o'clock  p.  m.,  an  additional  five  per  cent  shall  be  added  to  the 
amount  thereof;  and  the  unpaid  portion,  or  the  remaining  one  half  of 
said  taxes  shall  become  delinquent  on  the  first  Monday  in  February  next 


234  INSURANCE  LAWS   OF   CALIFORNIA. 

succeeding  the  day  upon  which  they  become  due  and  payable,  at  six 
o  'clock  p.  m. ;  and  if  not  paid  prior  thereto  five  per  cent  shall  be  added 
to  the  amount  thereof;  provided,  that  all  taxes  provided  for  or  levied 
under  this  act  which  are  not  fully  secured  by  real  property  are  due  and 
payable  at  the  time  the  assessment  is  made.  When  in  the  opinion  of  the 
state  board  of  equalization  any  of  the  taxes  provided  for  in  this  section 
are  not  a  lien  upon  real  property  sufficient  to  secure  the  payment  of  the 
taxes,  said  board  may  direct  the  controller,  or  his  duly  authorized  rep- 
resentative, to  collect  the  same  at  any  time  before  the  first  Monday  in 
August  thereafter,  and  the  controller  may  collect  the  taxes  by  seizure 
and  sale  of  any  property  owned  by  the  companj^  against  whom  the  tax 
is  assessed. 

The  sale  of  any  property  so  seized  shall  be  made  at  public  auction  and 
of  a  sufficient  amount  of  the  property  to  pay  the  taxes,  penalties  and 
costs,  and  be  made  after  one  week's  notice  of  the  time  and  place  of  such 
sale  given  by  publication  in  a  newspaper  of  general  circulation  published 
in  the  county  where  the  property  seized  is  situate,  or  if  there  be  no 
newspaper  of  general  circulation  published  in  such  county,  then  by 
posting  of  such  notice  in  three  public  places  in  such  county.  Said  notice 
shall  contain  a  description  of  the  property  to  be  sold  together  with  a 
statement  of  the  amount  of  the  taxes,  penalties  and  costs  due  thereon 
and  the  name  of  the  owner  of  said  property  and  a  further  statement 
that  unless  the  taxes,  penalties  and  costs  are  paid  on  or  before  the  day 
fixed  in  said  notice  for  such  sale  of  said  property,  or  so  much  thereof  as 
may  be  necessary  to  pay  said  taxes,  penalties  and  costs,  said  property 
will  be  sold  in  accordance  with  law  and  said  notice.  On  payment  of  the 
price  bid  for  any  property  sold,  the  delivery  thereof  with  bill  of  sale 
executed  by  the  controller  vests  the  title  in  the  purchaser.  The  unsold 
portion  of  any  property  so  seized,  may  be  left  at  the  place  of  sale  at  the 
risk  of  the  owner.  All  of  the  proceeds  of  any  such  sale  in  excess  of  the 
taxes,  penalties,  and  costs,  must  be  returned  to  the  owner  of  the  prop- 
erty sold,  and  until  claimed  must  be  deposited  in  the  state  treasury 
subject  to  the  order  of  the  owner  thereof,  his  heirs,  or  assigns. 

Within  ten  days  after  the  receipt  of  the  record  of  assessments  for 
state  taxes,  the  controller  must  begin  the  publication  of  a  notice  to 
appear  daily  for  two  weeks,  in  one  daily  newspaper  of  general  circula- 
tion published  at  the  state  capital,  in  one  daily  newspaper  of  general 
circulation  published  in  the  city  and  county  of  San  Francisco,  and  in 
one  daily  newspaper  of  general  circulation  published  in  the  city  of  Los 
Angeles,  specifying: 

1.  That  he  has  received  from  the  state  board  of  equalization  the  record 
of  assessments  for  state  taxes. 

2.  That  the  taxes  therein  assessed  are  due  and  payable  on  the  first 
Monday  in  July  and  that  one  half  thereof  will  be  delinquent  on  the 
sixth  Monday  after  the  first  Monday  in  July  at  six  o'clock  p.  m.,  and 
that  unless  paid  to  the  state  treasurer  at  the  capitol  prior  thereto,  fifteen 
per  cent  will  be  added  to  the  amount  thereof,  and  unless  paid  prior  to 
the  first  Monday  in  February  next  thereafter  at  six  o'clock  p.  m.,  an 
additional  five  per  cent  will  be  added  to  the  amount  thereof;  and  that 
the  remaining  one  half  of  said  taxes  will  become  delinquent  on  the  first 
Monday  in  February  next  succeeding  the  day  upon  which  they  became 
due  and  payable,  at  six  o'clock  p.  m. ;  and  if  not  paid  to  the  state  treas- 


TAXATION    OF   INSURANCE    COMPANII->.  235 

iirer  at  the  capitol  prior  thereto,  five  per  cent  will  be  added  to  the 
amount  thereof. 

Taxes  a  lien. 

Sec.  21.  The  taxes  levied  under  the  provisions  of  this  act  shall 
constitute  a  lien  upon  all  the  property  and  franchises  of  every  kind  and 
nature  belonging  to  the  companies  subject  to  taxation  for  state  pur- 
poses, which  lien  shall  attach  on  the  first  Monday  in  March  of  each 
year.  itvery  tax  herein  provided  for  has  the  effect  of  a  judgment 
against  the  company,  and  every  lien  created  by  this  act  has  the  effect 
of  an  execution  duly  levied  against  all  property  of  the  delinquent; 
the  judgment  is  not  satisfied  nor  the  lien  removed  until  such  taxes, 
penalties,  and  costs  are  paid,  or  the  property  sold  for  the  payment 
thereof.  No  final  discharge  in  bankruptcy  or  decree  of  dissolution  shall 
be  made  and  entered  by  any  court  until  all  taxes,  penalties,  and  costs 
due  on  assessments  made  under  ttie  provisions  of  this  act  shall  have 
been  paid  and  discharged. 

Amended,  Stats.  1913,  p.  622. 

Taxes  to  be  paid  to  state  treasurer. 

Sec.  22.  All  taxes  assessed  and  levied  as  provided  in  this  act  shall 
be  paid  to  the  state  treasurer,  upon  the  order  of  the  controller,  without 
deduction  for  any  taxes  assessed  and  levied  to  pay  the  principal  and 
i  n1  crest  of  any  bonded  indebtedness  mentioned  in  subdivision  (e)  of 
section  fourteen  of  article  thirteen  of  the  constitution  of  this  state,  and 
the  amount  due  to  the  cities,  cities  and  counties,  counties,  towns,  town- 
ships, and  districts  on  account  of  said  taxes  assessed  and  levied  for  such 
bonded  indebtedness  shall  be  paid  to  said  cities,  cities  and  counties, 
counties,  towns,  townships,  or  districts  in  the  manner  hereinafter  in  this 
act  provided.  The  controller  must  mark  the  date  of  payment  of  any  tax 
on  the  record  of  assessments  for  state  taxes.  He  must  give  a  receipt  to 
the  person  paying  any  tax,  or  any  part  of  any  tax,  specifying  the  amount 
of  the  assessment,  and  the  tax,  or  part  of  tax,  paid,  and  the  amount 
remaining  unpaid,  if  any,  with  a  description  of  the  property  assessed; 
provided,  that  the  receipt  for  the  second  half  of  the  taxes  may  refer,  by 
number  or  in  any  other  intelligible  manner,  to  the  receipt  given  for  the 
first  half  of  said  taxes,  in  lieu  of  a  description  of  the  property  assessed. 
Whenever  any  taxes,  penalties,  or  costs  collected  and  paid  to  the  state 
1  rcasurer  under  the  provisions  of  this  act,  shall  have  been  paid  more 
than  once,  or  shall  have  been  erroneously  or  illegally  collected,  or  when 
any  taxes  shall  have  been  collected  and  paid  pursuant  to  this  act  upon 
a  computation  erroneously  made  by  reason  of  clerical  mistake  of  the 
officers  or  employees  of  the  state  board  of  equalization,  or  shall  have 
been  computed  in  a  manner  contrary  to  law,  the  state  board  of  equaliza- 
tion shall  certify  to  the  state  board  of  control  the  amount  of  such  taxes, 
penalties,  or  costs,  collected  in  excess  of  what  was  legally  due,  from 
whom  they  were  collected  or  by  whom  paid,  and  it'  approved  by  said 
hoard  of  control,  the  same  shall  be  credited  to  the  company  or  person 
to  whom  it  rightfully  belongs,  at  the  time  of  the  next  payment  of  taxes. 
No  claim  for  such  eredit  shall  be  so  audited,  approved,  aWowed,  or 
paid  unless  presented  within  one  year  after  the  payment  sought  to  be 
refunded.  In  case  the  assessment  of  any  property  or  any  company  is 
duplicated  upon  the  state  assessment  roll,  or  there  appears  thereon  the 


236  INSURANCE   LAWS   OP   CALIFORNIA. 

assessment  of  any  company  whose  charter  has  been  forfeited  or  right 
to  do  business  in  this  state  has  been  forfeited,  or  the  assessment  of  any 
company  which,  for  any  reason,  could  not  be  legally  assessed,  the  state 
board  of  equalization  or  the  controller  shall  certify  such  fact  to  the 
state  board  of  control  and  said  board  of  control  shall  authorize  the 
cancellation  of  such  assessment. 
Amended,  Stats.  1913,  p.  622. 

Protest  of  taxes.  * 

Sec.  23.  Any  company,  person  or  association  claiming  and  pro- 
testing as  herein  provided  that  the  assessment  made  against  him  or  it 
by  the  state  board  of  equalization  is  void  in  whole  or  in  part  may  bring 
an  action  against  the  state  treasurer  for  the  recovery  of  the  whole  or 
any  part  of  such  tax,  penalties  or  costs  paid  on  such  assessment  upon 
the  grounds  stated  in  such  protest,  but  no  such  action  may  be  brought 
later  than  the  third  Monday  in  February  next  following  the  day  on 
which  the  taxes  were  due,  nor  unless  such  company,  person  or  associa- 
tion shall  have  filed  with  the  state  controller  at  the  time  of  payment  of 
such  taxes  a  written  protest  stating  whether  the  whole  assessment  is 
claimed  to  be  void,  or  if  a  part  only,  what  part,  and  the  grounds  upon 
which  such  claim  is  founded ;  and  when  so  paid  under  protest  the  pay- 
ment shall  in  no  case  be  regarded  as  voluntary.  Whenever  under  the 
provisions  of  this  section  an  action  is  commenced  against  the  state  treas- 
urer, a  copy  of  the  complaint  and  of  the  summons  must  be  served  upon 
the  treasurer,  or  his  deputy.  At  the  time  the  treasurer  demurs  or 
answers,  he  may  demand  that  the  action  be  tried  in  the  superior  court 
of  the  county  of  Sacramento,  which  demand  must  be  granted.  The 
attorney  general  must  defend  the  action.  The  provisions  of  the  Code 
of  Civil  Procedure  relating  to  pleadings,  proofs,  trials,  and  appeals  are 
applicable  to  the  proceedings  herein  provided  for.  A  failure  to  begin 
such  action  within  the  time  herein  specified  shall  be  a  bar  against  the 
recovery  of  such  taxes.  In  any  such  action  the  court  shall  have  power 
to  render  judgment  for  plaintiff  for  any  part  or  portion  of  the  tax, 
penalties  or  costs  found  to  be  void  and  so  paid  by  plaintiff  upon  such 
assessment. 

Amended,  Stats.  1913,  p.  623. 

Assessments  adjudged  invalid,  how  remade. 

Sec.  23a.  1.  Every  assessment  of  property  made  after  November  8, 
1910,  under  the  provisions  of  section  fourteen,  article  thirteen  of  the 
constitution  and  the  provision  of  this  act  which  is,  or  may  hereafter 
be  adjudged  to  be  invalid  by  reason  of  any  illegality,  invalidity,  or 
irregularity,  declared  or  existing,  in  the  assessment  of  such  property, 
or  in  the  mode  provided  for  the  assessment  thereof,  shall  be  remade  and 
the  property  reassessed  and  equalized  for  each  year  for  which  such 
assessment  is  invalid  as  aforesaid,  and  for  the  year  for  which  the  assess- 
ment of  such  property  was  invalid  as  aforesaid,  and  such  reassessment 
and  equalization  shall  be  made  by  the  same  officers  and  boards,  at  the 
same  time  or  times,  as  are  prescribed  by  law  for  the  assessment  and 
equalization  of  property,  of  the  same  classes  or  kinds  as  the  property 
which  hereby  is  required  to  be  reassessed.  The  assessment  and  equalized 
assessment  of  such  property  shall  be  entered  on  the  several  assessment 
rolls  or  books  in  the  same  manner  that  assessments  of  such  property 


TAXATION   OF   INSURANCE    COMPANIES.  237 

are  or  were  required  by  law  to  be  entered  for  the  year  or  years  for 
which  such  reassessments  shall  be  made.  And  there  is  hereby  levied 
for  state  purposes  the  same  rates  of  taxation  for  each  of  such  respective 
years  as  were  levied  upon  such  property  for  each  of  said  years  for  said 
state  purposes. 

2.  All  property  authorized  to  be  reassessed  by  this  act  shall  be  re- 
assessed and  equalized  by  the  proper  officers  and  boards  at  the  value  to 
which  and  to  the  person  or  corporation  to  whom  or  to  which  such 
property  ought,  for  each  of  such  years,  to  have  been  assessed,  under 
such  rules  of  notice  and  at  the  times  and  in  the  modes  as  are  prescribed 
tor  the  assessment  and  equalization  of  like  classes  of  property;  and  the 
assessment  and  equalization  thereof,  and  the  levy  and  collection  of  taxes 
thereunder,  shall  be  made  by  the  proper  officers  at  the  time,  upon  like 
notice  and  in  the  manner  now  or  hereafter  provided  by  law  for  making 
assessments  and  equalizing  the  same,  and  for  the  levy  and  collection  of 
taxes  on  like  classes  of  property;  and  if  the  taxes  so  relevied  shall 
become  delinquent,  there  shall  be  added  thereto  and  the  amount  thereof 
the  same  percentage  as  a  penalty  for  such  delinquency  as  is  added  to 
other  delinquent  taxes  on  like  classes  of  property ;  and  such  delinquent 
taxes  and  penalties  added  thereto  shall  be  collected  by  the  proper 
officers  in  the  manner  now  or  hereafter  provided  by  law  for  the  collec- 
tion of  delinquent  taxes  and  penalties  upon  like  classes  of  property,  the 
collectors  of  such  taxes  to  allow  as  credits  thereon  all  payments  thereto- 
fore made  on  the  tax  as  first  levied. 

3.  There  shall  be  no  limitation  or  limitations  as  to  the  time  in  which 
actions  for  the  collections  of  taxes  levied  under  this  section  may  be 
commenced,  and  all  the  provisions  of  law  now  or  hereafter  provided 
in  respect  to  assessments,  equalization,  levy,  and  collection  of  taxes 
shall,  where  applicable,  apply  to  reassessments,  equalization,  and  re- 
levies  and  collections  of  taxes  made  under  the  provisions  of  this  act. 

Enacted  June  12,  1913 ;  Stats.  1913,  p.  624. 

Controller  to  send  notice  of  delinquent  taxes. 

Sec.  24.  Within  ten  days  after  the  first  Monday  in  February,  the 
controller  shall  send  by  mail  to  the  last  known  address  of  any  company 
whose  taxes  are  delinquent  a  notice  of  the  amount  of  said  taxes,  penal- 
tics,  and  costs,  and  that  if  the  said  taxes,  penalties,  and  costs  are  not 
paid  on  or  before  the  Saturday  preceding  the  first  Monday  in  March 
next  thereafter  at  six  o'clock  p.  m.  of  said  day,  the  delinquent  company 
if  it  be  a  domestic  corporation  will  forfeit  its  charter  to  the  state,  and 
that  if  the  delinquent  company  be  a  foreign  corporation  it  will  forfeit 
its  right  to  do  business  in  this  state.  If  the  taxes,  penalties,  and  costs 
are  not  paid  within  the  time  specified  in  said  notice,  the  controller 
shall,  on  said  Saturday  preceding  the  first  Monday  in  March  at  six 
o'clock  p.  m.  of  said  day,  mark  on  the  record  of  assessments  for  state 
taxes  opposite  the  assessment  of  the  delinquent  company  the  words 
"charter  forfeited  to  the  state,"  if  the  delinquent  company  be  a  do- 
mestic corporation,  and  thereupon  said  charter  shall  be  so  forfeited,  and 
if  the  delinquent  company  be  a  foreign  corporation  the  words  "right 
to  do  business  forfeited"  and  thereupon  said  right  to  do  business  shall 
be  so  forfeited.  He  shall  at  once  report  to. the  secretary  of  state  the 
name  and  number  of  charter  of  each  corporation  whose  charter  or  right 
to  do  business  has  been  forfeited  for  non-payment  of  taxes,  and  the 


238  INSURANCE   LAWS   OP   CALIFORNIA. 

secretary  of  state  shall  at  once  report  the  same  to  the  governor.  The 
governor  shall  forthwith  issue  his  proclamation,  declaring  that  the  char- 
ters of  such  domestic  corporations  have  been  forfeited  and  the  right  of 
such  foreign  corporations  to  do  business  in  this  state  has  been  forfeited. 
Said  proclamation  shall  be  filed  immediately  in  the  office  of  the  secretary 
of  state,  and  immediately  thereafter  a  copy  of  said  proclamation  shall 
be  published  in  the  manner  provided  by  law  in  one  issue  of  one  daily 
newspaper  of  general  circulation  published  at  the  state  capital,  of  one 
daily  newspaper  of  general  circulation  published  in  the  city  and  county 
of  San  Francisco,  and  of  one  daily  newspaper  of  general  circulation 
published  in  the  city  of  Los  Angeles.  The  secretary  of  state  shall  there- 
upon transmit  a  certified  copy  of  the  proclamation  to  each  county  clerk 
in  the  state,  who  shall  file  the  same  in  his  office.  Any  such  corporation 
making  subsequent  payment  of  all  taxes,  penalties,  and  costs  due  the 
state,  and  in  addition  thereto  an  amount  equal  to  the  taxes  levied  under 
this  act  for  the  year  in  which  such  forfeiture  occurred,  for  each  year 
subsequent  to  such  forfeiture  and  to  the  time  of  such  redemption,  shall 
be  relieved  of  such  forfeiture,  and  the  controller  shall  notify  the  secre- 
tary of  state  thereof,  and  the  secretary  of  state  shall  annually  on  the 
first  Monday  in  April  transmit  to  the  county  clerk  of  each  county  in  this 
state  a  list  of  the  corporations  so  paying,  and  which  have  been  relieved 
of  such  forfeiture,  which  list  shall  be  by  said  county  clerk  filed  in  his 
office ;  provided,  the  rehabilitation  of  a  corporation  under  the  provisions 
of  this  act  shall  be  without  prejudice  to  any  action,  defense  or  right 
which  accrued  by  reason  of  the  original  forfeiture;  and  provided,  that 
in  case  the  name  of  an}r  corporation  which  has  suffered  the  forfeiture 
prescribed  in  this  act,  or  a  name  so  closely  resembling  the  name  of  such 
corporation  as  will  tend  to  deceive,  has  been  adopted  by  any  other  cor- 
poration since  the  date  of  said  forfeiture,  then  said  corporation  having 
suffered  such  forfeiture  shall  be  relieved  therefrom  pursuant  to  the 
terms  of  this  section  only  upon  the  adoption  by  said  corporation  seeking 
revivor  of  a  new  name,  and  in  such  case  nothing  in  this  act  contained 
shall  be  construed  as  permitting  such  corporation  to  be  revived  or  carry 
on  any  business  under  its  former  name ;  and  such  corporation  shall  have 
the  right  to  use  its  former  name  or  take  such  new  name  only  upon  filing 
an  application  therefor  with  the  secretary  of  state  and  upon  the  issuing 
of  a  certificate  to  such  corporation  by  the  secretary  of  state  setting  forth 
the  right  of  such  corporation  to  take  such  new  name  or  use  its  former 
name,  as  the  case  may  be ;  provided,  however,  that  the  secretary  of  state 
shall  not  issue  any  certificate  permitting  any  corporation  to  take  or  use 
the  name  of  any  corporation  heretofore  organized  in  this  state,  and  which 
has  not  suffered  a  forfeiture  prescribed  by  this  act,  or  to  make  ftakel  or 
use  a  name  so  closely  resembling  the  name  of  such  corporation  hereto- 
fore organized  in  this  state  as  will  tend  to  deceive.  Ihe  provisions  of 
title  9,  part  3  of  the  Code  of  Civil  Procedure,  in  so  far  as  they  conflict 
with  this  section,  are  not  applicable  to  corporations  seeking  revivor 
under  this  act.  The  controller  may,  on  or  before  the  thirtieth  day  of 
April  next  following  said  delinquency  and  forfeiture,  bring  an  action 
in  a  court  of  competent  jurisdiction  in  the  county  of  Sacramento  in  the 
name  of  the  people  of  the  State  of  California,  to  collect  any  delinquent 
taxes,  together  with  any  penalties,  or  costs,  which  have  not  been  paid  in 
accordance  with  the  provisions  of  this  act  and  appearing  delinquent 


TAXATION   OP   INSURANCE   COMPANIES.  239 

upon  the  record  of  assessments  for  state  taxes  hereinbefore  in  this  act 
provided  for.  The  attorney  general  must  prosecute  such  action,  and 
the  provisions  of  the  Code  of  Civil  Procedure  relating  to  service  of 
summons,  pleadings,  proofs,  trials,  and  appeals  are  applicable  to  the 
proceedings  herein  provided  for.  In  such  action  a  writ  of  attachment 
may  be  issued,  and  no  bond  or  affidavit  previous  to  the  issuing  of  said 
attachment  is  required.  In  the  case  of  companies  whose  charters  or 
right  to  do  business  has  been  forfeited  under  the  provisions  of  this  act, 
service  of  summons  may  be  made  upon  the  persons  now  provided  for  by 
law  to  be  served  as  agents  or  officers  of  any  of  such  companies  and  such 
persons  shall  be  deemed  to  be  the  agents  of  such  companies  for  all  pur- 
poses  necessary  in  order  to  prosecute  such  action.  Payment  of  the  taxes 
and  penalties,  or  amount  of  the  judgment  recovered  in  such  action  must 
be  made  to  the  state  treasurer.  In  such  actions  the  record  of  assessments 
for  state  taxes,  or  a  copy  of  so  much  thereof  as  is  applicable  in  said 
action,  duly  certified  by  the  controller,  or  by  the  secretary  of  the  state 
board  of  equalization,  showing  unpaid  taxes  against  any  company, 
person  or  association  assessed  by  the  state  board  of  equalization,  is 
prima  facie  evidence  of  the  assessment  upon  the  property  and  fran- 
chises, the  delinquency,  the  amount  of  the  taxes,  penalties,  and  costs 
due  and  unpaid  to  the  state,  and  that  the  company,  person,  or  associa- 
tion is  indebted  to  the  people  of  the  State  of  California  in  the  amount 
of  taxes  and  penalties  therein  appearing  unpaid,  and  that  all  the  forms 
of  law  in  relation  to  the  assessment  and  levy  of  such  taxes  have  been 
complied  with. 
Amended,  Stats.  1913,  p.  7. 

Penalty  for  continuing  business,  on  non-payment  of  taxes. 

Sec.  24a.  It  shall  be  unlawful  for  any  company,  either  domestic 
or  foreign,  which  has  not  paid  to  the  state  all  taxes,  penalties  and  costs 
as  in  this  act  prescribed  and  levied,  to  exercise  the  powers  of  such  com- 
pany, or  to  transact  any  business  in  this  state,  after  the  Saturday 
preceding  the  first  Monday  in  March  following  its  delinquency.  Each 
and  every  person  exercising  any  of  the  powers  of  such  delinquent  com- 
pany or  transacting  any  business  for  or  in  behalf  of  such  company  after 
the  Saturday  preceding  the  first  Monday  in  March  following  the  delin- 
quency of  such  company  as  provided  in  this  act,  except  to  settle  the 
affairs  of  such  company,  shall  be  guilty  of  a  misdemeanor,  and  upon 
eonviction  thereof  shall  be  punished  by  a  fine  of  not  less  than  twenty-five 
dollars  nor  more  than  one  hundred  dollars  for  each  day  such  violation 
of  the  law  continues,  which  fine  shall  be  paid  into  the  general  fund  of 
the  state  treasurer. 

Enacted  June  12,  1913.    Stats.  1913,  p.  625. 

Powers  and  duties  of  state  board. 

Sec.  25.  In  addition  to  the  powers  and  duties  prescribed  in  the 
Political  Code,  it  is  the  duty  of  the  state  board  of  equalization,  and  the 
said  board  shall  have  power,  for  carrying  this  act  into  effect: 

1 .  To  prescribe  the  forms  upon  which  the  reports  required  by  sections 
9,  12  and*  14  of  this  act  shall  be  made. 

2.  Whenever  deemed  necessary,  to  visit  as  a  board,  or  by  the  indi- 
vidual members  thereof,  or  to  send  its  secretary  or  duly  appointed 
representative  to  any  portion  of  this  state  for  the  purpose  of  inspect  ing 


240  INSURANCE   LAWS   OP   CALIFORNIA. 

property  and  learning  the  value  thereof,  and  of  collecting  information 
to  enable  it  to  justly  assess  and  levy  the  taxes  provided  for  in  this  act. 

3.  To  call  before  it,  or  any  member  thereof,  or  before  its  secretary  or 
duly  appointed  representative  on  such  visit,  any  public  officials,  and  to 
require  him  to  produce  any  public  record,  papers  or  documents  in  their 
custody. 

4.  To  issue  subpoenas  for  the  attendance  of  witnesses  or  the  produc- 
tion of  books  before  the  board,  or  any  member  thereof ;  which  subpoenas 
must  be  signed  by  a  member  of  the  board,  and  may  be  served  by  any 
person. 

5.  To  require  any  person  having  knowledge  of  the  business  of  any 
of  the  companies  mentioned  in  section  fourteen  of  article  thirteen  of  the 
constitution  of  this  state,  or  having  the  custody  of  the  books  and  accounts 
of  such  companies,  to  attend  before  the  board  or  any  member  thereof, 
or  before  the  secretary  or  the  duly  appointed  representative  of  said 
board  and  bring  with  him  for  inspection  any  books,  or  papers,  of  such 
company  in  his  possession  or  under  his  control,  and  to  testify  under 
oath  touching  any  matter  relating  to  the  assessment  to  be  made  under 
this  act.  A  member  of  the  board,  its  secretary,  or  duly  appointed  rep- 
resentative is  authorized  to  administer  such  oath. 

6.  Said  board  of  equalization  is  hereby  authorized  and  empowered  to 
examine  the  books  and  accounts  of  all  companies  required  by  law  to 
report  to  it  and  to  employ  an  expert  accountant  or  accountants  to  assist 
in  the  examination  of  the  books  and  accounts  of  any  such  companies 
when  in  the  judgment  of  said  board  the  exigencies  of  the  case  may  so 
require. 

7.  It  shall  be  unlawful  for  any  member  or  ex-member  of  the  state 
board  of  equalization,  or  for  any  agent  employed  by  it,  or  for  the  con- 
troller, or  ex-controller,  or  for  any  person  employed  by  him  or  for  any 
person  who  may  at  any  time  have  obtained  such  knowledge  from  any  of 
the  foregoing  officers  or  persons,  to  divulge  or  make  known  in  any 
manner  whatever  not  provided  by  law,  any  of  the  following  items  of 
information  concerning  the  business  affairs  of  companies  reporting  to 
the  said  board : 

(a)  Any  information  concerning  the  business  affairs  of  any  company 
which  is  gained  during  an  examination  of  its  books  and  accounts  or  in 
any  other  manner,  and  which  information  is  not  required  to  be  reported 
to  the  state  board  of  equalization  in  the  reports  or  statements  provided 
for  in  paragraphs  numbered  one  to  ten  of  section  nine  and  paragraphs 
numbered  one  to  ten  of  section  fourteen  of  this  act. 

(b)  Any  information,  other  than  the  assessment  and  the  amount  of 
taxes  levied,  obtained  by  the  state  board  of  equalization  in  accordance 
with  the  provisions  of  this  act,  from  any  company  other  than  any  of 
those  enumerated  in  sections  two,  three  and  four  of  this  act. 

(c)  Any  particular  item  or  items  of  information  relating  to  the 
disposition  of  its  earnings  contained  in  the  report  of  a  quasi-public 
corporation  which  any  such  corporation  may,  by  written  communication 
specifying  the  items  and  presented  at  the  time  when  it  files  its  report, 
request  shall  be  treated  as  confidential ;  provided,  however,  that  if  the 
governor  shall  direct  that  any  of  the  information  herein  referred  to  be 
made  public,  then  it  shall  no  longer  be  unlawful  to  divulge  or  make 
known  the  same. 


TAXATION    OF    INSURANCE    COMPANIES.  241 

Any  violation  of  the  provisions  of  this  subdivision  shall  be  a  misde- 
meanor and  shall  be  punished  by  a  fine  not  exceeding  five  hundred 
dollars,  or  by  imprisonment  not  exceeding  six  months,  or  both,  at  the 
discretion  of  the  court. 

County  auditors  to  report  assessments  of  real  estate  of  banks. 

Sec.  26.  On  the  second  Monday  in  August  of  each  year  the  auditor 
of  each  county  must  report  to  the  state  board  of  equalization,  in  addi- 
lioii  to  the  items  required  to  be  so  reported  by  him  under  section  three 
thousand  seven  hundred  and  twenty-eight  of  the  Political  Code,  the 
value  of  each  piece  of  real  estate  other  than  mortgage  interests  therein 
belonging  to  each  hank  in  his  county  as  assessed  and  equalized  for  pur- 
poses of  county  taxation.  Whenever  the  state  board  of  equalization  is 
satisfied  after  investigation  that  any  county  assessor,  or  board  of  equal- 
ization,  has  assessed  any  real  estate  belonging  to  any  bank  above  its  full 
(  ash  value  and  has  thereby  unjustly  reduced  the  amount  of  taxes  due 
the  state  from  said  bank,  said  state  board  shall,  under  such  rules  of 
notice  to  the  clerk  of  the  board  of  supervisors  of  the  county  affected 
thereby  as  the  said  state  board  shall  deem  reasonable,  equalize  the 
assessed  value  of  such  real  estate  and  shall  upon  completion  of  said 
equalization  issue  an  order  to  said  assessor  or  board  of  equalization  and 
1o  the  county  auditor  of  the  county  in  which  said  real  estate  is  located, 
fixing  the  assessed  value  of  said  real  estate.  The  value  so  equalized  and 
fixed,  and  no  other,  shall  be  deemed  the  value,  assessed  for  county  taxes, 
of  such  real  estate,  and  the  sole  basis  of  taxation  upon  such  real  estate 
for  county  taxes.  A  copy  of  the  order  certified  by  the  secretary  of  the 
state  board  of  equalization  shall  be  prima  facie  evidence  of  the  regu- 
larity of  all  proceedings  of  the  board  resulting  in  the  action  which  is 
the  subject-matter  of  the  order. 

State  board  to  equalize  assessments  of  real  estate  of  insurance  companies. 

Si-:c.  27.  The  state  board  of  equalization  shall  immediately  after  the 
county  and  city  assesssments  have  been  completed,  ascertain  the  value 
of  any  real  estate  belonging  to  any  insurance  company  as  assessed  and 
equalized  for  purposes  of  county  and  of  city  taxation.  Whenever  the 
state  board  of  equalization  is  satisfied  after  investigation  that  any 
county,  city  and  county,  city,  or  district  assessor,  or  board  of  equaliza- 
tion, lias  assessed  any  real  estate  belonging  to  any  insurance  company 
a  hove  its  full  cash  value  and  has  thereby  unjustly  reduced  the  amount 
of  taxes  due  the  state  from  said  insurance  company,  said  state  board 
shall,  under  such  rules  of  notice  to  the  clerk  of  the  board  of  supervisors 
of  the  county  or  the  proper  officer  of  the  city  affected  as  the  board  shall 
deem  reasonable,  equalize  the  assessed  value  of  such  real  estate  and  shall 
upon  the  completion  of  said  equalization,  issue  an  order  to  said  assessor 
or  hoard  of  equalization  and  to  the  county,  city  and  county,  city,  or 
district  auditor  or  clerk  of  the  county,  city  and  county,  city,  or  district 
in  which  said  real  estate  is  located,  fixing  the  assessed  value  of  said  real 
•  state.  The  value  so  equalized  and  fixed,  and  no  other,  shall  be  deemed 
Hie  value,  as  assessed  for  county,  city  and  county,  city,  or  district  taxes, 
of  such  real  estate,  and  the  sole  basis  of  taxation  upon  such  real  estate, 
for  county,  municipal  and  district  taxes.  A  copy  of  the  order  certified 
by  the  secretary  of  the  state  board  of  equalization  shall  be  prima  facie 
evidence  of  the  regularity  of  all  proceedings  of  the  board  resulting  in 
the  action  which  is  the  subject-matter  of  the  order. 
1»;     loo*  is 


242  INSURANCE   LAWS   OP   CALIFORNIA. 

Assessors  to  segregate  on  assessment  roll. 

Sec.  28.  Each  county,  city  and  county,  city,  and  district  assessor 
must  segregate  on  his  assessment  roll,  as  directed  by  the  state  board  of 
equalization : 

1.  The  assessments  made  by  the  state  board  of  equalization,  and  ap- 
portioned to  the  county,  city  and  county,  city,  town,  townhsip,  or  dis- 
trict, upon  the  franchises,  roadway,  roadbed,  rails  and  rolling  stock  of 
all  railroads  operated  in  more  than  one  county  in  this  state  under  the 
provisions  of  the  Political  Code  as  the  same  existed  and  were  in  force 
on  the  seventh  day  of  November  in  the  year  one  thousand  nine  hundred 
and  ten ;  and 

2.  The  assessments  made  by  said  assessors  of  any  other  property 
enumerated  in  subdivisions  (a),  {b)  and  (d)  of  section  fourteen  of 
article  thirteen  of  the  constitution  of  this  state,  which  is  located  in  the 
county,  or  city  and  county,  or  any  city,  town,  township,  or  district  in 
which  it  is  subject  to  taxation  for  paying  the  principal  and  interest  of 
any  bonded  indebtedness  created  and  outstanding  by  any  city,  city  and 
county,  county,  town,  township,  or  district  prior  to  the  eighth  day  of 
November  in  the  year  one  thousand  nine  hundred  and  ten,  as  provided 
in  subdivision  (c)  of  section  fourteen  of  article  thirteen  of  the  constitu- 
tion of  this  state. 

Immediately  upon  completion  of  the  assessment  and  equalization  of 
property  for  the  purposes  of  taxation  in  each  year  the  auditor  or  clerk 
of  each  county,  city  and  county,  city,  town,  or  district  must  transmit  to 
the  state  board  of  equalization  a  duplicate  of  that  part  of  the  assessment 
roll  containing  the  assessments  and  apportionments  referred  to  in  para- 
graphs one  and  two  of  this  section. 

Whenever  the  state  board  of  equalization  is  satisfied  after  investiga- 
tion that  any  county,  city,  or  other  assessor,  or  board  of  equalization, 
has  assessed  for  taxation  to  pay  the  principal  and  interest  of  any  bonded 
indebtedness  created  and  outstanding  by  any  county,  city  and  county, 
city,  town,  township,  or  district  prior  to  the  eighth  day  of  November  in 
the  year  one  thousand  nine  hundred  and  ten,  as  provided  in  subdivision 
(e)  of  section  fourteen  of  article  thirteen  of  the  constitution  of  this 
state,  any  of  the  property  taxes  exclusively  for  state  purposes  as  pro- 
vided in  subdivision  (a),  (b)  and  (d)  of  section  fourteen  of  article 
thirteen  of  the  constitution  of  this  state,  or  has  assessed  for  purposes  of 
county,  city  and  county,  city,  or  district  taxation  the  property  other 
than  the  franchise  of  any  company  taxable  for  a  franchise  under  sub- 
division (d)  of  said  section  and  article  of  the  constitution,  above  its  full 
cash  value  and  has  thereby  unjustly  reduced  the  amount  of  taxes  due 
the  state  on  such  property,  said  state  board  shall,  under  such  rules  of 
notice  to  the  clerk  of  the  board  of  supervisors  of  the  county,  or  city  and 
county,  or  to  the  city  clerk  of  the  city,  affected  thereby  as  the  board 
shall  deem  reasonable,  equalize  the  assessed  value  of  such  property,  and 
shall  issue  an  order  to  said  assessor  or  board  of  equalization  and  to  the 
county  or  city  auditor  or  clerk  of  the  county,  city  and  county,  or  city  in 
which  the  property  is  located,  fixing  the  assessed  value  of  such  property. 
The  value  so  equalized  and  assessed,  and  no  other,  shall  be  deemed  the 
value  of  said  property,  and  its  assessment  for  taxes  levied  to  pay  the 
principal  and  interest  of  any  such  outstanding  bonded  indebtedness, 
and  in  the  case  of  companies  taxable  for  a  franchise  under  said  sub- 


TAXATION   OP   INSURANCE    COMPANIES.  243 

division  (d)  of  said  section  and  article  of  the  constitution  shall  be 
deemed  the  value  of  the  said  property,  and  its  assessment  for  taxes  for 
county,  city  and  county,  municipal  and  district  purposes. 

When  making  the  tax  levy  and  fixing  the  rates  of  taxation  for  county, 
city  and  county,  city,  town,  township,  or  district  purposes,  the  board  of 
supervisors  of  any  county,  or  city  and  county,  and  the  corresponding 
authority  in  any  city,  having  bonded  indebtedness  issued  and  outstand- 
ing on  the  eighth  day  of  November  in  the  year  one  thousand  nine 
hundred  and  ten,  shall  fix  the  tax  rate  for  such  bonded  indebtedness 
separate  and  apart  from  all  other  tax  rates,  whether  for  subsequent 
bonded  indebtedness  or  for  other  purposes. 

The  county,  city  and  county,  or  city  auditor  or  clerk  shall  extend  on 
the  assessment  roll  against  the  assessments  segregated  as  herein  pro- 
vided, the  taxes  necessary  to  pay  the  principal  and  interest  of  said 
bonded  indebtedness  at  the  same  rate  as  said  taxes  for  payment  of  prin- 
cipal and  interest  of  said  outstanding  bonded  indebtedness  shall  be 
levied  upon  the  other  classes  of  property  within  the  same  county,  city 
and  county,  city,  town,  township,  or  district,  and  the  amount  of  each 
such  taxes  shall  be  certified  by  said  auditor  or  clerk  to  the  controller  and 
the  amount  so  certified  shall  then  be  credited  by  the  controller  to  the 
county,  city  and  county,  city,  town,  township,  or  district  to  which  it  is 
due ;  and  said  amount  shall  be  paid  by  said  controller  to  the  treasurer  of 
such  county,  or  city  and  county  as  provided  in  section  twenty-nine  of 
this  act,  and  upon  such  payment  said  treasurer  shall  forthwith  certify 
such  fact  to  the  tax  collector  who  shall  thereupon  mark  upon  the  assess- 
ment roll  the  date  of  payment  and  the  words  "paid  by  the  state  treas- 
urer.''  The  city  clerk  or  auditor  shall  in  the  certificate  mentioned  in 
this  paragraph  also  state  the  date  when  taxes  in  such  city  shall  become 
delinquent.* 

State  to  pay  part  of  principal  and  interest  of  outstanding  bond  debts. 

Sec.  29.  The  controller  shall  out  of  the  taxes  collected  by  him  as 
provided  in  this  act  credit  to  the  fund  created  by  an  act  of  the  thirty- 
ninth  session  of  the  legislature  entitled:  "An  act  appropriating  money 
for  the  purpose  of  payment  of  that  part  of  the  principal  and  interest  of 
any  bonded  indebtedness  created  and  outstanding  by  any  city,  city  and 
county,  county,  town,  township  or  district  on  the  eighth  day  of  Novem- 
ber in  the  year  one  thousand  nine  hundred  and  ten,  which  is  provided 
for  in  section  fourteen  of  article  thirteen  of  the  constitution  of  this 
state,  and  as  provided  in  an  act  of  the  thirty-ninth  session  of  the  legisla- 
ture entitled  'An  act  to  carry  into  effect  the  provisions  of  section  four- 
teen of  article  thirteen  of  the  constitution  of  the  State  of  California  as 
said  constitution  was  amended  November  8,  1910,  providing  for  the 
separation  of  state  from  local  taxation,  and  providing  for  the  taxation 
of  public  service  and  other  corporations  for  the  benefit  of  the  state,  all 
relating  to  revenue  and  taxation  V'  the  money  due  to  each  county,  city 
and  county,  city,  town,  township,  or  district  on  account  of  taxes  to 
pay  the  principal  and  interest  of  any  bonded  indebtedness  created  and 
outstanding  by  any  city,  city  and  county,  county,  town,  township  or 
district,  on  the  eighth  day  of  November  in  the  year  one  thousand  nine 
hundred  and  ten.     The  controller  shall  in  the  months  of  October  and 


244  INSURANCE   LAWS   OP   CALIFORNIA. 

March  in  each  year  settle  with  the  treasurer  of  each  county  and  city  and 
county  for  the  money  collected  by  said  controller  under  this  section,  for 
the  moneys  due  said  county  or  city  and  county  and  the  townships  and 
districts  within  such  county  or  city  and  county,  in  the  same  manner  as 
settlements  are  made  between  the  county  or  city  and  county  treasurers 
and  the  controller  as  provided  for  in  section  three  thousand  eight  hun- 
dred and  sixty-six  of  the  Political  Code.  The  controller  shall  at  the 
same  times,  settle  with  each  city  and  town  for  the  moneys  due  such  city 
or  town  for  the  purposes  mentioned  in  this  section,  and  when  ready  for 
such  settlement  shall  notify  the  city  or  town  treasurer  of  the  amount 
of  money  due  the  city  or  town  for  said  purposes,  and  that  upon  receipt 
of  proper  authority  so  to  do,  he  will  forward  to  said  city  or  town  treas- 
urer a  warrant  for  the  amount  thereof;  provided,  however,  that  upon 
receipt  of  notice  from  any  such  city  or  town  treasurer  that  any  bond 
issue  matures  for  principal  or  interest  before  the  date  of  such  settle- 
in  cut,  which  notice  shall  state  the  amount  thereof  due  from  the  state 
and  the  date  of  maturity,  and  that  said  amount  due  from  the  state  is 
required  in  order  to  pay  the  same,  the  said  controller  must,  before  said 
date  of  maturity,  forward  his  warrant  to  such  city  or  town  treasurer  in 
the  manner  above  provided  for  the  amount  ascertained  by  him  to  be 
due.  The  treasurer  of  the  county  or  city  and  county  shall  forthwith, 
upon  receipt  by  him  of  the  moneys  so  hereinbefore  directed  to  be  paid 
by  said  controller,  credit  the  amount  so  received  by  him  to  the  county, 
city  and  county,  township  or  district,  respectively  entitled  thereto,  and 
pay  the  same  in  the  manner  provided  by  law. 

Any  excess  paid  by  the  controller  to  a  county,  city  and  county,  city, 
town,  or  to  a  county  or  city  and  county  or  any  township  or  district,  over 
and  above  the  state's  share  of  the  amount  actually  expended  by  such 
county,  city  and  county,  city,  town,  township  or  district,  to  pay  the 
interest  and  principal  of  said  bonded  indebtedness  in  any  year,  shall  be 
repaid  to  the  state  in  such  manner  as  the  controller  shall  direct. 

State  to  reimburse  counties. 

Sec.  30.  Until  the  year  one  thousand  nine  hundred  and  eighteen  the 
state  shall  reimburse  any  and  all  counties  which  sustain  loss  of  revenue 
by  the  withdrawal  of  railroad  property  from  county  taxation  for  the 
net  loss  in  county  revenue  occasioned  by  the  withdrawal  of  railroad 
property  from  county  taxation  in  the  manner,  at  the  times,  and  in  the 
amounts  specified  in  an  act  of  the  thirty-ninth  session  of  the  legislature 
entitled  "An  act  to  provide  for  the  reimbursement  of  counties  in  this 
state  which  sustain  net  loss  of  revenue  by  the  withdrawal  of  railroad 
property  from  county  taxation,  under  the  provisions  of  section  fourteen 
of  article  thirteen  of  the  constitution  of  this  state.' ' 

State  not  to  pay  county  treasurers'  expenses. 

Sec.  31.  The  provisions  of  section  three  thousand  eight  hundred 
and  seventy-six  of  the  Political  Code  shall  not  apply  to  the  settlements 
made  with  the  state  treasurer  under  sections  twenty -nine  and  thirty  of 
this  act,  but  the  county  board  of  supervisors  may  if  it  deem  necessary 
allow  the  county  treasurer  the  actual  expenses  incurred  in  collecting  the 
money  due  the  county  from  the  state. 


*     TAXATION    OF    INSURANCE    COMPANIES.  245 

Counties  to  reimburse  loss  to  districts. 

Sec.  32.  The  board  of  supervisors  of  each  county  shall  in  the  month 
of  September  of  each  year  determine  the  amount  of  loss  to  each  district 
in  the  county  where  loss  is  occasioned  in  such  district  by  the  withdrawal 
from  local  taxation  of  property  taxed  for  state  purposes  only,  and  in 
tlir  month  of  December  next  thereafter  shall  reimburse  such  district 
t'ronfthe  general  fund  of  the'connty  for  one  half  of  such  loss,  and  in  the 
month  of  May  next  thereafter  shall  reimburse  such  district  from  the 
general  fund  of  the  county  for  the  remaining  one  half  of  such  loss. 

All  property  in  state  subject  to  deficiency  tax. 

Sec.  33.  Any  tax  required  to  be  levied  for  state  purposes  as  pro- 
vided in  subdivision  (<  |  of  section  fourteen  of  article  thirteen  of  the 
constitution  as  amended  the  eighth  day  of  November  in  the  year  one 
thousand  nine  hundred  and  ten,  to  meet  any  deficiency  in  the  state 
revenue  shall  be  assessed,  levied  and  collected  on  all  property  in  the 
state,  n<>t  exempt  from  taxation  including  the  classes  of  property  enu- 
merated in  this  act,  under  the  provisions  of  the  Political  Code  relating 
to  the  assessment,  levy  and  collection  of  state  and  county  taxes  as  said 
provisions  were  in  force  on  the  seventh  day  of  November  in  the  year 
One  thousand  nine  hundred  and  ten. 

Prior  laws  not  repealed  for  certain  purposes. 

Sec.  34.  Nothing  in  this  act  shall  be  construed  as  repealing  any  laws 
in  force  prior  to  the  eighth  day  of  November  in  the  year  one  thousand 
nine  hundred  and  ten,  relating  to  taxation,  in  so  far  as  said  laws  may 
be  necessary  for  the  assessment,  levy,  and  collection  of  state,  county, 
city  and  county,  municipal  or  district  taxes,  or  in  so  far  as  said  laws 
may  he  necessary  for  the  assessment,  levy  and  collection  of  the  taxes 
provided  for  in  section  twenty-two  of  article  four  of  the  constitution  as 
amended  on  the  eighth  day  of  November  in  the  year  one  thousand  nine 
hundred  and  ten;  or  in  bo  far  as  said  laws  may  be  necessary  for  the 
Mticnt.  levy  and  collection  of  the  taxes  for  state  purposes,  on  all  the 
property  in  the  state,  not  exempt  from  taxation,  to  meet  a  deficiency  in 
the  revenues  for  the  support  of  the  state  government,  or  to  pay  the 
principal  and  interest  of  any  bonded  indebtedness  created  and  out- 
standing by  any  city,  city  and  county,  county,  town,  township,  or  dis- 
trict, both  as  provided  in  subdivision  (c)  of  section  fourteen  of  article 
thirteen  of  the  constitution  as  amended  on  the  eighth  day  of  November 
in  the  year  one  thousand  nine  hundred  and  ten. 

Sec.  35.  In  so  far  as  the  rates  of  taxation  upon  the  property  and 
franchises  described  and  enumerated  in  section  fourteen  of  article  XIII 
of  the  constitution  of  the  State  of  California  and  in  section  one  of  the 
act  of  which  this  act  is  in  part  amendatory,  differ  from  the  rates  of 
taxation  upon  such  property  and  franchises  as  fixed  and  defined  by  this 
act,  it  is  hereby  declared  to  be  the  intent  and  purpose  of  the  legislature, 
two  thirds  of  all  the  members  elected  to  each  of  the  two  houses  voting 
in  favor  thereof,  by  virtue  of  the  authority  conferred  upon  the  legis- 
lature by  subdivision  /  of  section  fourteen  of  article  XIII  of  the  con- 
stitution to  change  the  rates  of  taxation  heretofore  fixed  and  imposed  by 
s;iid  section  of  the  constitution  and  enumerated  and  specified  in  the  act 
of  which  this  act  is  amendatory  to  the  rates  fixed,  determined,  estab- 
lished and  set  forth  by  and  in  this  act. 


246  INSURANCE   LAWS  OF   CALIFORNIA. 

This  tax  levy,  and  each  and  every  of  the  percentages  or  rates  of 
taxation  herein  and  hereby  determined,  made,  fixed  and  established  to 
be  paid  by  the  persons,  firms,  companies  and  corporations  specified, 
described  or  included  in  section  14  of  article  XIII  of  the  constitution, 
are  and  have  been  determined,  made,  fixed  and  established  after  a  full, 
complete,  open  and  public  investigation  and  hearing  by  and  before  this 
legislature  upon  and  respecting  the  value  of  each  and  all  of  the  prop- 
erties and  franchises  included  within  or  enumerated  in  section  14  of 
article  XIII  of  the  constitution,  and  of  all  other  and  different  property 
subject  to  taxation  of  any  kind  within  the  State  of  California,  of  which 
investigation  and  hearing  every  and  all  persons,  firms,  companies  and 
corporations  concerned  therein  or  affected  thereby  had  due  notice;  and 
at  which  investigation  and  hearing  the  legislature  took  oral  and  written 
evidence  and  at  which  hearing  every  and  all  persons,  firms,  companies 
and  corporations  concerned  therein  or  affected  thereby  and  who  desired 
so  to  do,  were  given  an  opportunity  to  and  did  appear  and  were  heard 
and  introduced  evidence  before  this  legislature  respecting  and  showing 
the  value  of  said  properties  and  franchises  included  within  or  enumer- 
ated in  said  section  14  of  article  XIII  of  the  constitution  and  also 
respecting  and  showing  the  value  of  all  other  and  different  property 
subject  to  taxation  of  any  kind  within  the  State  of  California,  and 
after  the  due  consideration  of  all  of  said  evidence  by  this  legislature 
and  its  ascertainment  and  determination  therefrom  and  thereon  of  the 
value  of  said  and  all  of  said  hereinbefore  mentioned  properties  and 
franchises ;  and  the  percentages  or  rates  of  taxation  herein  and  hereby 
determined,  fixed  and  established  have  been  and  are  determined,  fixed 
and  established  and  have  been  and  are  based,  upon  the  value  of  each, 
all  and  every  of  the  properties  and  franchises  included  within  or  enu- 
merated in  said  section  14  of  article  XIII  of  the  constitution  as  ascer- 
tained and  determined  as  aforesaid  by  this  legislature  and  constitute 
and  are  the  percentages  or  rates  of  taxation  ascertained  and  determined 
by  this  legislature  which  when  applied  in  the  manner  provided  and 
required  by  law,  do  and  will  levy  a  tax  upon  said  properties  and  fran- 
chises included  within  or  enumerated  in  said  section  14  of  article 
XIII  of  the  constitution  in  proportion  to  the  value  of  the  same  and  in 
proportion  to  the  value  of  every  and  all  other  and  different  property 
subject  to  taxation  of  any  kind  within  the  State  of  California  as  ascer- 
tained and  determined  as  aforesaid  by  this  legislature. 

Amended,  Stats.  1913,  p.  9. 


INDEX. 


A 

Abandonment.     (See  Marine  insurance.) 

Accident.  Page. 

Time  for  giving  notice  of.     §  2633a,  Civ.  Code 89 

Accident  insurance  companies  doing  business  on  the  assessment  plan.  (See 
Life,  health,  Accident  and  annuity  or  endowment  insurance  companies 
doing  business  on  the  assessment  plan. 

Accident  and  sick  benefit  associations.     (See  Fraternal  benefit  societies.) 

Accident  and  health   insurance  companies.   (See  Insurance  companies.) 

How  classified.     §  594,  Pol.  Code 8 

Capital,  amount  of.     §  594,  Pol.  Code 8 

May  do  other  kinds  of  insurance.     §  594,  Pol.  Code 8 

Insolvent,   when.     §  602,   Pol.   Code 19 

Accumulations. 

How  may  be  invested.     §  421,  Civ.  Code 46 

Acknowledgment.     (See  Agent;  Process.) 

Actions. 

Not  to  be  transferred  to  federal  courts.     §  608,  Pol.  Code 26 

For  rcovery  of  fines,  taxes,  assessments  and  penalties.     §  6346,  Pol.  Code__        41 

Plaintiff  may  join  different  parties.     §  383,  Code  Civ.  Pro 107 

To    recover    insurance,    what    defendant    claiming    exemption    must    plead. 
§  437a,  Code  Civ.  Pro 107 

Acts.     (See  Statutes.) 

Of  insurance  commissioner  may  be  reviewed  by  court.     §  631,  Pol.  Code 39 

Actuary. 

Commissioner  may  employ.     §§  601,  629,  Pol.  Code 19,  38 

Compensation  of.     §§  601,  629,  Pol.  Code 19,  38 

Must  certify  valuation  of  policies  of  fraternal  benefit  societies.     §  23,  Act___      138 

Agents,  general. 

Appointment  of.     §  616,  Pol.  Code 31 

Filing  fee  of  appointment  of.     §  605,  Pol.  Code 25 

Service  of  process  on.     §  616,   Fol.  Code 31 

Appointment  may  be  revoked.     §  616,  Pol.   Code   (note) 32 

Insurance  by.     §  2589,  Civ.  Code 82 

Agents  and   solicitors. 

License  of.     §  633,  Pol.  Code 40 

Fee.     §  605,   Pol.  Code 25 

Alphabetical  list  of.     §  633,  Pol.  Code 40 

Annuity  report.     (See  Annual  statement.) 

Insurance  commissioner.     §  595,   Pol.   Code 12 

Distribution  of.     §337,  Pol.  Code  (note) 1_        14 

Annual  statement. 

Filing   fee.     §  605,   Pol.   Code 25 

Must  be  filed  before  engaging  in  business.     §  607,  Pol.  Code 26 

How  verified.     §  610,   Pol.   Code 27 

When  to  be  filed.     §  611,  Pol.   Code 27 

Publication  of  synopsis  of.     §611,  Pol.  Code 27 

By  companies  other  than  life,  must  show.     §  612,  Pol.  Code 28 

By  life,  health  and  accident  companies.     §  613,  Pol.  Code 2!) 

Insurance  commissioner  must  furnish  printed  forms  for.     §  615,  Pol.  Code 31 

Penalty  for  failure  to  file.     §  617,  Pol.  Code ^ 33 

Of  fraternal  benefit  societies.     §  23,  Act 138 

Annuity  insurance  on  the  assessment  plan.  (See  Life,  health,  accident  and 
annuity  or  endowment  insurance  companies  doing  business  on  the  assess- 
ment plan.) 

Arson.     (See  Crimes.) 

Defined.     §  447,   Pen.   Code 111 

Degrees   of.      §  453,    Pen.    Code 112 

First  degree.     §  454,  Pen.  Code 113 

Second  degree.     §  454,  Pen.   Code 113 

Punishment  of.     §  455,  Pen.  Code 113 


248  INDEX. 

Articles  of  Incorporation. 

Filing  fee.     §  605,   Pol.    Code 25 

Changes  in,  filing  fee.     §  605,  Pol.  Code 25 

Must  be  filed  before  engaging  in  business.     §  607,  Pol.  Code __^ 26 

Of  mutual  benefit  and  life  associations.     §  452a,  Civ.  Code 54 

Assessment. 

Of  companies  for  expenses  commissioner's  office.  §  606,  Pol.  Code 25 

Payable  on  demand.     §  634b,  Pol.  Code .. 41 

When  directors  may  assess  capital  stock.     §  331,  Civ.  Code 44 

Limitations   on.      §332,    Civ.    Code II 

Of  mutual  benefit  and  life  associations.     §  453,  Civ.  Code 54 

Act  providing  for  printed  notice  on  cover  of  policy 158 

Of  real  estate  of  insurance  companies,  state  board  to  equalize 241 

Assessment   associations.     (See   Life,   health,   accident  and  annuity  or  endow- 
ment Insurance  companies  doing  business  on  the  assessment  plan.) 

Assessment   live   stock   associations,   or  corporations. 

Contract  defined.     §  1,  Act 126 

How  may  be  formed.     §  2,  Act 127 

Investments.     §  2,   Act— ^ 127 

Condition  precedent  to  issuing  insurance.     §  2,  Act 127 

What  contracts  shall  specify.     §  3,   Act 127 

Reserve  fund  required.     §  4,  Act 127 

Foreign  corporation,  conditions  required.     §  5,  Act 128 

Limitations  of  contract.     §6,  Act L29 

Applications  for  insurance.     §  6,   Act 12!» 

Penalty  for  false  statements.     §  6,  Act 

Benefit  not  liable  to  attachment.     §7,  Act 129 

Annual  statement  to  be  filed.     §8,  Act 139 

When  license  may  be  revoked.     §  9,  Act 129 

Assessments,  notice  of  to  be  mailed.     §10,  Act LS0 

Fees,  for  filing  statement,  etc.     §  12,  Act 130 

Expenses  of  insurance  commissioner,  how  paid.     §  13,  Act 130 

.    Time  act  shall  take  effect.     §14,  Act : 1 ISO 

Assets.     (See  Capital;  Capital  stock.) 

Attorney  in  fact.     (See  Interinsurance  associations.) 

Attorneys.     (See  Agents;  Process;  Service  of  process.) 

Attorney  General. 

Must  examine  all  documents.     §  596a,  Pol.  Code IT 

Opinion  of,  governs  commissioner.     §  596a,  Pol.  Code IT 

Proceedings  against  fraternal  benefit  societies.     §25,  Act : 111 

Authority.     (See  Certificate;   Certificate  of  authority.) 

Automobile   insurance.      (See  Insurance  companies.) 

How  classified.     §594,  Pol.  Code 8 

Capital,  amount  of.     §  594,  Pol.  Code 8 

May  do  what  other  kinds  of  insurance.     §  594,  Pol.  Code 8 

Insolvent,  when.     §  602,  Pol.   Code 19 

B 

Beneficiary  associations.     (See  Fraternal  benefit  societies.) 

Exempt  from  insurance  laws.     §  630,  Pol.  Code 39 

Boiler  and   machinery  insurance.     (See  Insurance  companies.) 

How  classified.     §  594,  Pol.  Code 

Capital,  amount  of.     §  594,  Pol.  Code 

Insolvent,  when.     §602,   Pol.   Code *. 19 

Bond.     (See  Sureties  and  surety  corporations;   Surplus  line  brokers.) 

Of  insurance  commissioner.     §  593,  Pol.  Code 7 

Surplus  line  broker.     §  596,  Pol.  Code 14 

Of  insurance  company.     §  623,  Pol.   Code 36 

Fee  for  filing.     §  605,  Pol.  Code 25 

Renewal  of.     §  623,  Pol.  Code 36 

When  separate  bonds  must  be  given.     §  624,  Pol.  Code ^__  36 

Justification  of  sureties.     §  955,   Pol.   Code 41 

Surety  company  may  be  accepted  as  sole  surety.     §  955,  Pol.  Code 41 

Surety  may  become  liable  for  less  than  full  penal  sum.     §  956,  Pol.  Code 11 

An  act  to  facilitate  the  giving  of,  required  by  law.     §§  1  to  4,  Act 117 


INDEX.  249 

Bonds.  Page. 

Report  on  stocks  and  bonds  held.   §  422,  Civ.  Code 47 

Broker.     (See  Surplus  line  broker;  Licenses;  Bond;  Surety  corporations.) 

Building. 

Defined.    §  448,    Pen.    Code 112 

Inhabited,   defined.     §  449,  Pen.  Code 112 

Burglary  insurance  companies.      (See  Insurance  companies.) 

How   classified.      §  594,   Pol.    Code :___  S 

Capital,   amount  of.     §  594,   Pol.   Code S 

By-laws. 

Of  mutual  benefit  and  life  associations.     §  453,  Civ.  Code 54 

Amendments  to,  of  fraternal  benefit  societies.     §  22,   Act 138 

C 

Capital.     (See  Capital  stock.) 

How  to  be  invested.     §  421,   Civ.   Code 46 

Time  to  be  paid  in.     §  424,  Civ.   Code 48 

Fixed,  what  constitutes  a  deficiency  in.     §  439,  Civ.  Code 51 

Declaration  of  fixed,  to  be  filed.     §  440,  Civ.  Code 51 

Capital  Stock.     (See  Capital.) 

Amount  required  of  insurance  company.     §  594,  Pol.  Code 7 

Must  be  fully  paid  up.     §  594,  Pol.  Code 7 

Must  be  exclusive  of  liabilities.     §  594,  Pol.  Code 7 

Bonds  can  not  be  held  in  lieu  of  capital  stock.     §  594,  Pol.  Code  (note) 11 

Impairment  of.     §  602,  Pol.   Code 19 

Assessment  of,  on  insolvency.     §  604,  Pol.  Code 24 

Assessment  of,  when  directors  may  levy.     §  331,  Civ.  Code 41 

Limitation  on  assessment  of.     §  332,  Civ.  Code 44 

Subscription  to  and  how  collected.     §  414,  Civ.  Code 44 

Certificate  of  paid  up,  to  be  filed  and  when.     §  425,  Civ.  Code 48 

Amount  of,  of  mutual  life,  health  and  accident  insurance  companies.     §  437, 

Civ.    Code    50 

Certificate  of  increase  of,  to  be  filed  with  commissioner.     §  607,  Pol.  Code—  26 

Cash   premiums. 

Mutual  fire  insurance  company.     §  8,  Act 124 

Casualty   insurance   companies.     (See  Insurance  companies;   Miscellaneous  in- 
surance companies.) 

Certificate.     (See  Licenses.) 

Fee  for  issuing.     §  605,  Pol.  Code 25 

Of  unincorporated  companies.     §  607,  Pol.   Code 26 

Of  deposit.     §  619,  Pol.  Code 34 

Of  paid  up  capital  stock,  to  be  filed  when.     §  425,  Civ.  Code 37 

<  »f  proof  of  loss,  when  dispensed  with.     §  2637,  Civ.  Code 90 

Certificate  of  authority.      (See  Licenses.) 

Company  must  procure.     §  596,  Pol.   Code 14 

Expires  when.     §  596,   Pol.   Code 14 

When  can  not  be  granted  or  renewed.     §  596,  Pol.  Code 14 

Revocation  for  insolvency.     §  603,  Pol.  Code 19 

Commissioner  may  issue  new,  on  restoration.     §  603a,  Pol.  Code 23 

Fee  for  issuing  annual.     §  605,  Pol.   Code 25 

Certificate  of  compliance. 

Must  be  filed  when.     §  607,  Pol.  Code 1 26 

Certified  copies.     (See  Copies.) 

Fee  for  making.     §  605,   Pol.   Code 25 

Charter. 

Copy  must  be  filed.     §  607,  Pol.  Code 26 

Civil  actions.     (See  Actions.) 

Parties  to.     §  383,  Code  Civ.  Pro 107 

Pleadings  in.     §  437a,   Code  Civ.   Pro 107 

Compensation. 

Of  insurance  commissioner  and  deputy.     §  589,  Pol.  Code 6 

Compliance.     (See  Certificate  of  compliance.) 


250  INDEX. 

Concealment  and  representations.  Page. 

What  is.     §  2561,  Civ.  Code 77 

Effect  of.     §  2562,  Civ.   Code— I 78 

What  must  be  disclosed.     §  2563,  Civ.  Code 78 

Matters  of  opinion  need  not  be  communicated.     §  2564,  Civ.  Code 78 

Materiality,  test  of.     §  2565,  Civ.  Code 78 

Matters  each  party  is  bound  to  know.     §  2566,  Civ.  Code 78 

Waiver  of  communication  of  facts.     §  2567,  Civ.  Code 78 

Interest  of  insured.     §  2568,  Civ.   Code 79 

Intentional  omission,  fraudulent.     §  2569,  Civ.  Code 79 

Matters  of  opinion.     §  2570,   Civ.   Code 79 

Representation,  oral  or  written.     §  2571,  Civ.  Code 79 

Representation,  when  made.     §  2572,  Civ.   Code 79 

Representation,  how  interpreted.     §  2573,  Civ.  Code 79 

Representation,  as  to  future.     §  2574,  Civ.   Code 79 

Representation,  how  may  affect  policy.     §  2575,  Civ.  Code 79 

Representation,  may  be  withdrawn.     §  2576,  Civ.  Code 80 

Representation,  time  intended  by.     §  2577,  Civ.  Code 80 

Representation,  of  information.     §  2578,  Civ.  Code 80 

Representation,  when  deemed  false.     §  2579,  Civ.  Code 80 

Representation,  effect  of  falsity.     §  2580,  Civ.  Code 80 

Representation,  materiality  of,  how  determined.     §  2581,  Civ.  Code 80 

Provisions  as  to  modification.     §  2582,  Civ.  Code 80 

When  right  to  rescind  may  be  exercised.     §  2583,  Civ.  Code 80 

When  intentionally  false  insurer  may  rescind.     §  2676,  Civ.  Code 94 

Eventual  falsity  of,  as  to  expectation.     §  2677,  Civ.   Code 94 

Constitution.     (See  By-laws.) 

Contracts.     (See  Policy.) 

Of    life,    health,    accident    and    annuity    or    endowment    insurance    on    the 

assessment  plan,  defined.     §  453d,  e,  g,  Civ.  Code 57,  58,  59 

Of  insurance.     §  2527,   Civ.   Code 71 

Designation  of  parties  in.     §  2538,  Civ.  Code 74 

Who  may  make.     §  2539,  Civ.  Code 74 

Who  may  be  insured  under.     §  2540,  Civ.  Code 74 

Assignment  of  mortgage,  under.     §  2541,  Civ.   Code 74 

Transfer  of  insurance  from  a  mortgagor  to  a  mortgagee.     §  2542,  Civ.  Code  75 

Right  to  rescind.     §  2583,  Civ.   Code 80 

Contingent  liability. 

Of  members  in  mutual  fire  insurance  companies.     §  4,  Act 123 

Copies. 

Fee  for  furnishing  copies  of  papers.     §  605,  Pol.  Code 25 

Fee  for  certifying  to  copies  of  papers.     §  605,  Pol.  Code 25 

Costs.     (See  Fees  and  costs.) 

County  clerks. 

Insurance  commissioner  must  certify  to.     §  625a,  Pol.  Code 37 

County  fire  insurance  companies. 

Incorporation.      §  1,    Act 118 

Articles  of  incorporation.     §  2,   Act 118 

Certificate.     §  2,  Act 118 

Directors,  number  of.     §  3,  Act 119 

Officers.     §  4,   Act  119 

Bonds  and  officers.  .  §  5,  Act 119 

By-laws  and  powers.     §  6,  Act 119 

Membership.     §  7,  Act 119 

Risks.     §8,   Act  120 

Risks,  classification  of.     §  9,  Act 120 

Risks,  limitation  upon.     §  10,  Act 120 

Losses,  adjustment  of.     §  11,  Act 120 

Deficiency,  assessment  for.     §  12,  Act 121 

Assessment,  notice  of.     §  13,  Act 121 

Assessment,  neglect  or  refusal  to  pay.     §  14,  Act 122 

Annual  statement.     §  15,  Act 122 

Withdrawal  of  member.     §  16,  Act 122 

Report  of  officer.     §  17,  Act — 122 

Dissolution.     §  18,   Act  122 

Conflicting  laws  repealed.     §  19,  Act _ 122 


INDEX.  251 

Credit  insurance  companies.     (See  Insurance  companies.)  Page. 

How  classified.     §  594,  Pol.  Code 8 

Capital,  amount  of.     §  594,  Pol.  Code 8 

Insolvent,  when.     §  602,   Pol.   Code 19 

Crimes.     (See  Penalty;  Arson.) 

Commissioner  must  certify  facts  to  district  attorney.     §  632,  Pol.  Code 39 

Against  property.     §§  447  to  455  and  548,  549,  Pen.  Code - 111,  112,  113 

Carrying  on  business  without  license.     §  435,  Pen.  Code .  Ill 

Insurance  in  unauthorized  companies.     §  439,  Pen.  Code 111 

Arson,   defined.     §  447,   Pen.   Code 111 

Cyclone  insurance.     (See  Miscellaneous  insurance  companies.) 

D 

Definition. 

Of  authorized  companies.      §  596,  Pol.   Code 14 

Of  word  "company."     §  634a,  Pol.  Code 41 

Of  building.     §  448,  Pen.   Code 112 

Of  inhabited  building.     §  449,  Pen.  Code 112 

Of  nighttime.     §  450,  Pen.   Code 112 

Of  burning.     §  451,  Pen.   Code 112 

Of  insured.     §  1,  Act 151 

Of  loss.     §  1,  Act  151 

Of  time  of  loss  or  damage.     §  1,  Act 151 

Deposit  by  foreign  companies. 

Amount  required.     §  594,  Pol.  Code 7 

Kind  of  securities.     §  594a,  Pol.  Code,  §  421,  Civ.  Code 11,  46 

With  what  official.     §  594a,  Pol.  Code 11 

Existence,   how  certified.     §  594,   Pol  Code 10 

Value  of  securities.     §  594a,  Pol.  Code 12 

For  whose  benefit.     §  594a,  Pol.  Code 12 

How  deposited  with  insurance  commissioner.     §  594a,  Pol.  Code 12 

How  withdrawn.     §  594a,  Pol.  Code 12 

Certificate  of  deposit.     §  594a,  Pol.  Code 12 

Fee  for  issuing  certificate  of.     §  605,  Pol.   Code 25 

Fee  for  filing  certificate.     §  605,  Pol.  Code 25 

Deposit. 

Fee  for  issuing,  certificate  of.     §  605,  Pol.  Code 25 

Fee  for  filing  certificate  of.     §  605,  Pol.  Code 25 

General  provisions  as  to.     §  618,  Pol.  Code 33 

Of  mortgages,  how  made.     §  618,  Pol.  Code 33 

Of  stocks  and  bonds,  fees  for  appraisal  of.     §  618,  Pol.  Code 33 

Certificate  of.     §  619,  Pol.  Code 34 

Withdrawal  of,  how  made.     §  620,  Pol.  Code 34 

Under  retaliatory  law.     §  622,  Pol.   Code 35 

For  benefit  of  registered  policies.     §  634,  Pol.  Code 40 

Deputy  insurance  commissioner. 

Salary  of.     §  589,  Pol.  Code 6 

Deviation.     (See  Voyage;  Marine  insurance.) 

Is  proper  when.     §2695,  Civ.  Code 96 

Is  improper  when.     §  2696,  Civ.  Code 96 

Insurer  is  exonerated  by  improper.     §  2697,  Civ.  Code 96 

From  standard  form  of  policy.     §  12,  Act 153 

Notwithstanding,  policy  valid.     §  12,  Act 153 

Directors. 

Liable  for  loss  on  insurance  when.     §  418,  Civ.  Code 45 

Liable  on  what  policies.     §  418,  Civ.  Code 45 

Distribution. 

Of  annual  report.     §  595,  Pol.  Code  (note) 12 

District  attorney. 

Commissioner  must  certify  violations  of  law  to.     §  632,  Pol.  Code 39 

Dividends. 

Directors  must  make,  when.     §  417,  Civ.   Code 45 

What  not  to  be  treated  as.     §  417,  Civ.  Code 45 

Amounts  to  be  reserved  before  making.     §§  429,  430,  Civ.  Code 49 

Of  mutual  life,  health  and  accident  insurance  companies.     §  452,  Civ.  Code  54 


252  INDEX. 

Double  insurance.  Page. 

What  is.     §  2641,  Civ.  Code 90 

Contribution  in  case  of.     §  2642,  Civ.  Code 90 

E 

Employers'  liability. 

Acts  of  1911  and  1913 1 166,  177 

Endowment  insurance  companies  doing  business  on  the  assessment  plan.  (See 
Life,  health,  accident  and  annuity  insurance  companies  doing  business 
on  the  assessment  plan.) 

Equalization,  state  board  of. 

Insurance  commissioner  must  report  to.     §  11,   Act 227 

Time  of  meeting  of.     §  18,  Act 1 232 

Protest  of  taxes  to.     §  23,  Act 236 

Powers  and  duties  of.     §  25,  Act 239 

Must  equalize  assessments  of  real  estate  of  insurance  companies.     §  27,  Act  241 

Examination. 

Commissioner  must  make.     §§  595,  597,  Pol.  Code 12,  17 

Expenses  of,  how  paid.     §  597,  Pol.  Code 17 

Commissioner  must  keep  statement.     §  600,  Pol.  Code 19 

Annual,  of  securities  deposited.     §  621,  Pol.  Code 34 

Of  domestic  fraternal  benefit  societies.     §  24,  Act 140 

Of  foreign  fraternal  benefit  societies.     §  25,  Act 141 

Examining   physician.     (See  Physician.) 

Exchange  of  indemnity. 

Act   143 

Expense.     (See  Insurance  commissioner.) 

Of  examinations,  how  paid.     §  597,  Pol.  Code 17 

Of  insurance  commissioner  to  be  paid  by  companies,  when.    5  606,  Pol.  Code  25 

Experts. 

Commissioner  may  employ,  when.     §597,  Pol.  Code 17 

F 

Federal  courts. 

Actions  not  to  be  transferred  to.     §  608,  Pol.  Code 26 

Fees  and  costs. 

Surplus  line  brokers.     §  596,  Pol.  Code 14 

For  filing  annual  statement.     §  605,  Pol.  Code 25 

For  filing  articles  of  incorporation.     §  605,  Pol.  Code 25 

For  filing  changes  in  articles  of  incorporation.     §  605,  Pol.  Code 25 

For  filing  bond  of  company.     §  605,  Pol.  Code 25 

For  filing  appointment  of  agent  and  stipulation.     §  605,  Pol.  Code' 25 

For  filing  stipulation.     §  605,  Pol.   Code 25 

For  filing  certificate  of  deposit  of  securities.     §  605,  Pol.  Code 25 

For  furnishing  copies  of  papers.     §  605,  Pol.  Code 25 

For  certifying  copies.     §  605,  Pol.   Code * 25 

For  issuing  certificate  of  deposit  of  securities.     §  605,  Pol.  Code 25 

For  registering  policies  of  life  insurance.     §  605,  Pol.  Code 25 

For  issuing  annual  certificate  of  authority.     §  605,  Pol.  Code 25 

For  issuing  annual  license  to  agents.     §  605,  Pol.  Code 25 

For  attaching  seal  to  paper  not  specified.     §  605,  Pol.  Code 26 

For  issuing  other  certificates.     §  605,  Pol.  Code 25 

Of  secretary  of  state.     §  409,  Pol.  Code 155 

Payments  must  be  made  on  basis  of  gold  coin.     §  627,  Pol.  Code 37 

Fidelity  insurance  companies.     (See  Insurance  companies.) 

How  classified.     §  594,  Pol.  Code 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

May  do  other  kinds  of  insurance.     §  594,  Pol.  Code 7 

Insolvent,  when.     §  602,  Pol.  Code 19 

Financial  statement.     (See  Annual  statement.) 

Fine.     (See  Penalty.) 

For  failure  to  file  annual  statement.     §  617,  Pol.  Code 33 

Fire  insurance. 

Alteration  without  consent.     §  2753,  Civ.  Code 103 

Alteration  not  increasing  risk.     §  2754,  Civ.   Code 104 


INDEX.  253 

Fire   insurance — Continued.  Page. 

Subsequent  acts  of  insured.     §  2755,  Civ.  Code 104 

Measure  of  indemnity  defined.     §2756,  Civ.  Code 104 

Policy,  value  of  interest  in.     §  2757,  Civ.  Code 104 

Value  of  insured's  interest,  how  may  be  fixed.     §  2757,  Civ.  Code 104 

Fire   insurance   companies.      (See   Insurance   companies;   Mutual  fire   insurance 
companies;  Foreign  insurance  companies;  Standard  policy  of.) 

How  classified.     §  594,  Pol.  Code 7 

Capital,   amount  of.     §  594,   Pol.   Code 7 

May  do  other  kinds  of  insurance.     §  594,  Pol.  Code 7 

Insolvent,   when.     §  602,   Pol.   Code 19 

Capital  to  be  paid  up,  how  and  when.     §  424,  Civ.  Code 48 

Property  which  may  be  insured.     §  426,  Civ.  Code -19 

Limitation  on  risks.     §  428,  Civ.  Code 19 

Dividends,  amount  to  be  reserved  before  making.    §§  429,  430,  Civ.  Code 49 

Fire   patrol 

Dutiefl  and  powers  of  underwriters.     §  453«,  Civ.  Code 55 

Rights  of  way  of  and  its  officers.     §  453b,  Civ.  Code '. 55 

Abandonment  of  building.     §  453a,   Civ.   Code 55 

Assessment  to  maintain.     §  453c,  Civ.   Code 56 

Kxpenses  of,  limit  upon.     §  453c,  Civ.   Code 56 

Fire   insurance  companies,   may   maintain.     §  453a,   Civ.   Code 55 

Injuries  to  property  of.     §  453b,  Civ.  Code '  55 

1    iws  affecting  fire  department  apply  to.     §  453b,  Civ.  Code 56 

Maintenance  of,  statement  of  premiums.     §  453c,  Civ.  Code 56 

Meeting  of.     I  163c,  Civ.  Code 56 

Obstruction  of,  on   \va\    to  fire,  punishment.     §  453b,  Civ.  Code - —  55 

J'ower  to  enter  building  and  take  property.     §  453a,  Civ.  Code 55 

Regular  fire  department  not  to  be  interfered  with.     §  453a,  Civ.  Code 55 

Right  Of  way  while  running  to  fires.     §  453b,  Civ.  Code 55 

Underwriters  may  maintain.     §  453a,  Civ.   Code 55 

Fire  underwriters.     (See  Fire  patrol.) 

Fly  wheel  insurance.     (See  Insurance  companies.) 

Foreign  insurance  companies.     (See  Taxes;  Deposit;  and  Insurance  companies.) 

Deposits  by.      §  594a,   Pol.   Code 11 

Examination   of.     §  597,   Pol.   Code 1 17 

"V\  ithdrawal  of.      §  595,   Pol.   Code 12 

statement  of,  how  verified.     §  610,  Pol.   Code 28 

Forfeiture.     (See  Penalty.) 

Forms. 

Commissioner  must  prepare  and  furnish.     §  615,  Pol.  Code 3.1 

Fraternal   benefit  societies. 

Exempt  from  insurance  laws.     §  630,  Pol.  Code,  §  4,  Act 39,  131 

Exempt  from  taxation.     §  30,  Act 14a 

Defined.     §  1,  Act l 131 

Lodge  system,  defined.     §  2,  Act , 131 

Representative   form  of  government  defined.   §  3,  Act 131 

Benefits  of.     §  5,  Act 131 

Beneficiaries.     §  6,  Act  132 

Membership,  qualifications  for.     §  7,  Act 132 

Certificates  of  membership.   §  8,  Act 132 

Funds  of.     §  9,  Act  133 

Investment  of.     §  10,  Act 133 

Distribution  of.     §11,   Act  ___^ - 133 

Organization  of.     §  12,  Act 133 

Powers  retained  by  societies  now  in  business.     §  13,  Act 135 

Mergers  and  transfers.     §  14,  Act 136 

Licenses,   annual.     §  15,   Act  \ 136 

Admission  of  foreign  societies.     §  16,  Act 136 

Power  of  attorney  to  insurance  commissioner.     §  17,  Act 137 

Service  of  process  on.     §  17,  Act 137 

Place  of  meeting  of.     §  18,  Act 138 

No  personal  liability  of  officers  or  members.     §  19,  Act 138 

Subordinate  lodge  can  not  waive  laws.     §  20,  Act 138 


254  INDEX. 

I 

Fraternal  benefit  societies — Continued.  Page. 

Benefits  not  attachable.     §  21,  Act 138 

Amendments  to  constitution  and  laws.     §  22,  Act 138 

Reports  of.     §  23,  Act 138 

1     Valuation  of  policies  of.     §  23a,  Act 139 

Examinations  of.     §§  24,  26,  Act 140,  141 

Publication  of  findings.     §  27,  Act '. 141 

Revocation  of  license  of.     §  28,  Act 141 

What  societies  are  exempt.     §29,  Act 142 

Taxation  of.     §  30,  Act 142 

Penalties  for  violation  of  laws  relating  to.     §  31,  Act 143 

Fraternal   insurance  companies. 

Act  to  regulate  organization  of 156 

Fraud. 

Breach  of  warranty  without.     §  2612,  Civ.  Code 86 

Premiums  returned  for.     §  2619,  Civ.  Code 87 

Relieves  insurer.     §  2629,  Civ.  Code 88 

Freightage.     (See  Marine  insurance.) 

What  is.     §  2661,   Civ.   Code 92 

Expected.     §  2662,   Civ.   Code 93 

Interest  in,  what.     §  2663,  Civ.  Code 93 

How  affected  by  abandonment  of  ship.     §  2730,  Civ.  Code 100 

Funds.     (See  Investments.) 

G 

General  agents.     (See  Agents,  general.) 

Appointment  of,  to  be  filed.     §  616,  Pol.  Code 31 

Governor  of  state. 

Insurance  commissioner  is  appointed  by.     §  368,  Pol.  Code S 

Term  of  office  of  appointees  of.     §  369,  Pol.  Code 5 

Insurance  commissioner  must  make  annual  report  to.     §  595,  Pol.  Code 12 

H 

Health,  accident  and  annuity  or  endowment  insurance  companies  doing  business 
on  the  assessment  plan.  (See  Life,  health  and  accident  and  annuity  or 
endowment  insurance  companies  doing  business  on  the  assessment  plan.) 

Health  insurance  companies.  (See  Accident  and  health  insurance  companies; 
Mutual  life  insurance  companies.) 

I 

Implied  warranties.     (See  Warranties.) 

Increase.     (See  Capital  stock.) 

Indemnity.     (See  Measure  of  indemnity.) 

Information.     (See  Marine  insurance.) 

Must  be  communicated.     §  2669,  Civ.  Code , 93 

Material.     §  2670,  Civ.  Code 93 

Presumed  to  have  had  knowledge.     §  2671,  Civ.  Code 93 

Injunction. 

Attorney  general  must  bring  suit  for.     §  25,  Act 141 

Inland  navigation  insurance  companies.     (See  Insurance  companies.) 

How  classified.     §  594,  Pol.  Code 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

When  insolvent.     §  602,  Pol.   Code 19 

Insolvency. 

Commissioner  must  examine  companies.     §  597,  Pol.  Code 17 

When  companies  are.     §  602,  Pol.   Code 19 

Revocation  of  certificate  of  authority.     §  603,  Pol.  Code 23 

Company  may  repair  capital.     §  603a,  Pol.  Code 24 

Commissioner  must  certify  to  attorney  general.     §  604,  Pol.  Code 24 

Proceedings  on.     §§  604,  604a,  Pol.  Code 24,  25 

Receiver  may  reinsure  business.     §  604,  Pol.  Code 24 

Who  may  commence  proceedings.     §  604,  Pol.  Code 24 

Laws  applicable.     §  604a,  Pol.   Code 25 

Of  fraternal  benefit  societies.     §  24,  Act 140 


INDEX.  255 

Page. 

Insurance  in  general.  (See  Concealment;  Representation;  Policy;  Warranties; 
Premium;  Loss;  Notice  of  loss;  Reinsurance;  Double  insurance;  Insur- 
ance companies.) 

What  is.     §  2527,  Civ.   Code 71 

What  may  be  insured.     §  2531,  Civ.  Code 73 

Of  lottery  unauthorized.     §  2532,  Civ.  Code 1 73 

Usual  kinds  of.     §  2533,  Civ.  Code 74 

Code  provisions  govern  all  kinds  of.     §  2534,  Civ.  Code 74 

Defining  insurer  of.     §  2538,   Civ.   Code 74 

Who  may  insure.     §  2539,   Civ.   Code 74 

Who  may  be  insured.     §  2540,  Civ.  Code 74 

.   On  mortgaged  property.     §  2541,  Civ.  Code 74 

By  mortgagor.     §  2542,   Civ.   Code 75 

Insurance  commissioner. 

How  appointed.     §  368,   Pol.   Code 5 

Term  of  office.     §  369,   Pol.   Code 1 5 

Who  are  eligible.     §  588,  Pol.  Code 6 

Salary  of,  and  deputy.     §  589,  Pol.  Code 6 

Rooms  and  expense.     §  591,  Pol.  Code 6 

Location  of  office.     §  592,  Pol.  Code 7 

Bond  of.     §  593,  Pol.  Code 7 

Duties  of.     §  595,  Pol.  Code 12 

Annual  report  of.     §  595,  Pol.  Code 12 

How  distributed.     §595,  Pol.  Code -12 

Examination  of  companies.     §§  595,  597,  Pol.  Code 12,  17 

Where   conducted.     §  597,   Pol.   Code 17 

May  employ  experts  to  rewrite  books.     §  597,  Pol.  Code 17 

Must  furnish  information  to  policyholder.     §  598,  Pol.  Code 18 

May  subpoena  witnesses.     §  599,  Pol.   Code 19 

Must  keep  record  of  proceedings.     §  600,  Pol.  Code 19 

May  employ  actuary.     §  601,  Pol.  Code 19 

Must  revoke  certificate  of  insolvent  companies.     §  603,  Pol.  Code 23 

Must  report  insolvency  to  attorney  general.     §  604,  Pol.   Code 24 

May  assess  companies.     §606,  Pol.  Code 25 

May  reject  name  of  company.     §  609,  Pol.  Code 27 

Must  furnish  printed  forms  of  annual  statement.     §  615,  Pol.  Code 31 

Service  of  process  upon.     §  616,  Pol.  Code 31 

Must  deposit  securities  in  state  treasury.     §  618,  Pol.  Code 33 

Must  issue  certificate  of  deposit.     §  619,  Pol.  Code 34 

Must  furnish  information  to  assessors.     §  625,  Pol.  Code 37 

Must  certify  list  of  surety  companies  to  county  clerk.     §  625a,  Pol.  Code —  37 

Must  require  compliance  with  general  corporation  laws.     §  626,  Pol.  Code__  37 

Arts  may  be  reviewed  by  court.     §631,  Pol.  Code 3!) 

Must  publish  notice  of  withdrawal  of  companies.     §  631a,  Pol.  Code 39 

Must  certify  violations  of  law  to  district  attorney.     §  632,  Pol.  Code 39 

Must  keep  alphabetical  list  of  agents  and  solicitors.    §  633,  Pol.  Code 40 

May  commence  actions  for  recovery  of  fines.     §  634&,  Pol.  Code 41 

What  must  report  to  state  board  of  equalization.     §  11,  Act 227 

Insurance  companies.     (See  under  appropriate  titles.) 

Classification  of.     §  594,  Pol.  Code 7 

Certificate  of  authority  of.     §  596,  Pol.   Code 14 

Withdrawal  of,  from  state.     §  595,  Pol.  Code 12 

Examination  of.     §§  595,   597,  Pol.  Code 12,  17 

Authorized,  defined.     §  596,  Pol.   Code 14 

Expense  of  organizing.     §  597,  Pol.   Code _ 17 

Must  furnish  information  to  policyholder.     §  598,  Pol.  Code 18 

Insolvency  of.     §  602,  Pol.  Code i 19 

Revocation  of  certificate  of  authority.     §  603,  Pol.  Code 23 

May  repair  capital.     §  603a,  Pol.  Code 24 

Proceedings  before  judgment.     §  604,  Pol.  Code 24 

Assessment  for  expenses  by  commissioner.     §  606,  Pol.  Code 25 

Certificate  by  unincorporated  companies.     §  607,  Pol.  Code 26 

Must  submit  name  to  commissioner.     §  609,  Pol.  Code 27 

How  statements  and  reports  are  verified.     §  610,  Pol.  Code 27 


256  INDEX. 

Insurance   companies — Continued.  Page. 

Must  file  annual  statements.     §  611,  Pol.  Code 27 

What  annual   statement  of   companies   other   than   life   must  show.      §  612, 

Pol.    Code    28 

What  annual  statement  of  life  companies  must  show.     §  613,  Pol.  Code 29 

Mutual,  under  act  of  1851,  may  report  how.    §  614,  Pol.  Code 31 

Must  appoint  general  agent.     §  616,  Pol.  Code 31 

Must  file  stipulation  for  service  of  papers.     §  616,  Pol.  Code 31 

Deposit  of  securities  by.     §  618,  Pol.  Code ^___1 33 

Withdrawal  of  deposit  by.     §  620,  Pol.   Code 34 

Deposits  under  retaliatory  law.     §  622,  Pol.  Code 35 

Taxation  of.      §  622a,   Pol.   Code 35 

Bond  to  be  filed  by.     §  623,  Pol.  Code 36 

Must  give  separate  bonds,  when.     §  624,  Pol.  Code 36 

Companies  must  comply  with  general  corporation  laws.     §  626,  Pol.  Code—  37 

Companies  must  furnish  data  for  violation  of  life  policies.     §  629,  Pol.  Code  38 

Publication  of  notice  of  withdrawal.     §  631a,  Pol.  Code SI 

Deposits  for  registered  policies.     §  634,  Pol.  Code 40 

Rate  of  taxes.     §  3,  Act —  136 

Policies  of,  how  issued  and  by  whom  signed.     §  416,  Civ.  Code 46 

How  capital  and  accumulations  may  be  invested.     §  421,  Civ.  Code 46 

Insurance   companies   other  than    life.      (See  Insurance   companies.) 

What  annual  statement  must  show.     §  612.  Pol.  Code 28 

Insurance  corporations.     (See  Insurance  companies.) 

Insurable  interest.     (See  Insurance  in  general.) 

What  is.     §  2546,  Civ.   Code - 78 

What  may  consist.     §  2547,  Civ.   Code 76 

Of  carrier  or  depositary.     jj  2548,  Civ.  Code 76 

Mere  expectancies.     §  2549,  Civ.  Code 76 

Measure  of,  in  property.     §  2550,  Civ.  Code 76 

Insurance  without,   illegal.     §  2551,  Civ.  Code 76 

When  must  exist.     §  2552,  Civ.  Code 76 

Effect  of  transfer.     §  2553,  Civ.  Code 76 

Transfer  of,  after  loss.     §  2554,  Civ.  Code •___  76 

Exception  in  case  of  several  subjects  in  one  policy.     §  2555,  Civ.  Code_— 77 

In  case  of  death  of  insurer.     §  2556,  Civ.  Code 77 

In  case  of,  between  co-tenants.     §  2556,  Civ.  Code 77 

Policy  when  void.     §  2558,  Civ.  Code 77 

Interinsurance  associations. 

Who  may  exchange  indemnity.     §  1,  Act 143 

Dimit  of  liability  on  risk.     §  1,  Act 143 

May  appoint  attorney  in  fact.     §  2,  Act 143 

Papers  to  be  filed  by  attorney  in  fact.     §  2,  Act 143 

Stipulation,  form  of.     §  2,  Act 145 

Statement  to  be  filed.     §  2,  Act 144 

Certificate  of  authority.     §  3,  Act 145 

Fee  for  issuance  and  renewal.     §  3,  Act 145 

Annual  statement.     §  4,  Act 14r» 

Commissioner  must  examine  association.     §  5,  Act 145 

Unauthorized  contract  void.     §  7,  Act 146 

Taxation  of.     §  8,  Act 146 

Exempt  from  other  insurance  laws.     §  9,«Act 146 

Investments.     (See  Capital.) 

To  be  reported  to  commissioner.     §  421,  Civ.  Code 46 

Irrigation   districts. 

Act  relating  to  bonds  of 139 

J 
Joint  stock  and  mutual  insurance  companies. 

Must  have  assets  in  lieu  of  capital  stock.     §  594,  Pol.  Code 7 


INDEX.  257 

L 

Liability   insurance  companies.      (See  Insurance  companies.)  Page. 

How  classified.     8  594,  Pol.  Code 8 

Capital,  amount  of.     §  594,   Pol.   Code 8 

May  do  other  kinds  of  insurance.     §  594,  Pol.   Code 8 

Insolvent,   when.     §  602,   Pol.  Code 19 

Reserve  required.     8  602a,   Pol.   Code 20 

Licenses.     (See  Certificate  of  authority;  License  periods.) 

Surplus  line  broker.     8  596,  Pol.  Code — 14 

Surpjlua  line  broker,  revocation  of.     §  596,  Pol.  Code 14 

Of  surplus  line  broker,  can  not  issue  when.     §  596,  Pol.  Code 14 

I  >f  agents  and  solicitors.     8  633,  Pol.   Code " 40 

Fee  for  annual  license  to  agents  and  solicitors.     §  605,  Pol.  Code 25 

Transaction  of  business  without.     8  435,  Pen.  Code 111 

I'rocurement  of  business  for  unlicensed  foreign  companies  unlawful.     8  439, 

Pen.   Code  111 

License  periods.  • 

Of  broker,  from  July  1st  to  July  1st.     8  596,  Pol.  Code 14 

«  m    Insurance  companies,  from  July  1st  to  July  1st.     8  596,  Pol.  Code 14 

Of  agents  and  solicitors,  from  July  1st  to  July  1st.     |  f;:«,   Pol.  Code 40 

<m   fraternal  societies,  from  July  1st  to  July  1st.     §15,  Act 136 

Life,    health,    accident    and    annuity   or   endowment    insurance    companies    doing 
business   on   the   assessment   plan. 

Contracts  which  may  be  made  by,  defined.     §  453d,  Civ.  Code 57 

Application,   contract  to  be  founded  on.     §  453./,  Civ.  Code 60 

Article!  Of  incorporation,  filing  of.     8  453e,  Civ.  Code 58 

Benefit  societies  exempt  from  provisions  of.     8  453p,  Civ.  Code 62 

Bonds  or  security,  deposits  with  state  treasurer.     §  453e-ft,  Civ.  Code 58,  59 

Business,   compliance   with   Political  Code.     8  453e,   Civ.   Code 58 

IJusiness  to  be  commenced  within  one  year.     8  453e,  Civ.  Code 58 

Certificate  of  insurance  commissioner.     §  453e,  Civ.  Code 58 

Contract  of,  defined.     |  168(1,   <'iv.  Code 57 

Contracts,  membership  and  capital  required.     §  453e,  Civ.  Code 58 

Contracts,  what  to  specify.     8  453a,  Civ.   Code *,•_  59 

Corporations  to  carry  on,  law  governing.     §  453e,  Civ.  Code «.„  58 

I  >is( ontinuance  of  business.     §  453ft,   Civ.   Code 59 

Exempt,  money  obtained  from  corporation  is.     8  453Jc   Civ.   Code 61 

False  statements  to,   punishment  for.     §  453./,   Civ.   Code .       60 

Fees,  amount  and  disposition  of.     8  453n,  Civ.  Code : 62 

Foreign  corporations,  conditions  of  doing  business,     §  453i,  Civ.   Code ,__  60 

Foreign  corporations,  license  to  issue  when.     8  453/,  Civ.  Code 60 

Fraternal  societies  exempt  from  provisions  of.     §  453p,  Civ.  Code 62 

Insurance  commissioner,  duty  to  examine  into.     $  4532,  Civ.   Code 61 

Insurance  commissioner,  expenses,  allowance  and  payment  of.     §  453o,  Civ. 

Code 62 

Insurance  commissioner,   proceedings  by  against.     §  453Z,   Civ.   Code 61 

Investment  of  funds.     §  453e,   Civ.   Code— 58 

Lapsing  of  policies,  notices.     8  453w,  Civ.  Code . 61 

Lien  on  property  of,  indebtedness  on  contract  is.     §  453ft,  Civ.  Code 59 

Name  of.     8  453e,  Civ.  Code 58 

Organisation  within  one  year.     §  453e,  Civ.  Code 58 

Payment,  time  and  effect  of  failure  to  pay.     8  453a,  Civ.  Code 59 

Penalties,  disposition  of.     8  453n,  Civ.  Code 62 

Pre-existing  corporations,  rights  of.     8  453f,  Civ.  Code 59 

Priority  of  indebtedness  under  contract.     §  453a,  Civ.  Code 59 

Reserve  and  emergency  fund,   disposition  of.     §  453ft,   Civ.   Code 59 

Reserve  and  emergency  fund  to  be  created.     §  453ft,  Civ.  Code 59 

Revocation  of  power  to  do  business.     8  4532,  Civ.  Code 61 

Secret  societies  exempt  from  statute.     §  453p,  Civ.  Code 62 

Statements  to  be  filed  annually.     8  4532,  Civ.  Code 61 

Life  and   health   insurance.      (See  Insurance  in  general.) 

Upon  life,  when  payable.     §  2762,  Civ.  Code 105 

insurable  interest,  extent  of.     8  2763,  Civ.   Code 105 

Assignee,   interest  of.     §2764,   Civ.   Code 105 

Transfer  of  policy.     8  2765,  Civ.   Code 106 

Defining  measure  of  indemnity.     §2766,  Civ.  Code 106 

IT     10008 


258  INDEX. 

Life  insurance  companies.      (See  Insurance  companies.)  Page. 

How  classified.     §  594,  Pol.  Code 7 

Capital,  amount  of.     §  594,  Pol.   Code 7 

May  do  other  kinds  of  insurance.     §  594,  Pol.  Code 7 

Insolvent,   when.     §  602,   Pol.   Code 19 

What  annual  statement  must  show.     §  613.   Pol.   Code 29 

Lightning   insurance   companies.      (See  Insurance   companies.) 

How  classified.     §  594,  Pol.  Code *. 7 

Capital,  amount  of.     §  594,  Pol    Code 7 

Insolvent,   when.     §  602,   Pol.   Code 19 

Limitations.     (See  Risk.) 

On  risk  of  fire  and  marine  insurance  companies.     §  428,  Civ.  Code 49 

On  risk  taken  by  county  fire  insurance  companies.     §S  8,  10,  Act 120 

Live  stock  insurance  companies.     (See  Miscellaneous  insurance  companies.) 

Lodge  system.     (See  Fraternal  benefit  societies.) 

Loans. 

On   policies.    §  421,   Civ.   Code _•_ 46 

To  officers  or  employees,  unlawful.     §§  4532,   453rfd,  Civ.   Code 66.  67 

Act  prohibiting  borrowing-  by  an   officer 158 

Loss.     (See  Notice  of  loss.) 

What  perils  are  insured  against.     §  2626,  Civ.  Code 87 

Incurred  in  rescuing  from  peril.     §  2627,  Civ.  Code 88 

Perils  excepted.     §  2628,   Civ.   Code 88 

Negligence  does  not  exonerate  insurer.     §  2629,  Civ.  Code 88 

May  be  total  or  partial.     §  2701,  Civ.  Code 97 

When  not  total  is  partial.     §  2702,   Civ.   Code , 97 

May  be  actual  or  constructive.     §  2703,  Civ.  Code 97 

Actual  total.     §  2704,  Civ.  Code _ 97 

Constructive  total.     §  2705,   Civ.   Code 07 

Presumed.     §  2706,  Civ.  Code 97 

Upon  actual  total — insured  entitled  to  payment  without  notice  of  abandon- 
ment.    §  2709,   Civ.   Code 98 

Average.     §  2711,  Civ.  Code 98 

Insurance  against  total.     §  2712,  Civ.  Code 98 

How  marine  insurer  is  liable  upon  partial.     S  2737,  Civ.  Code 101 

Estimating,  under  open  policy.     §  2741,  Civ.  Code 102 

When  vessel  is  insure*  against  partial.     §  2742,  Civ.  Code 102 

General  average.     §  2744,   Civ.   Code 102 

In  case  of  a  partial.     §  2746,  Civ.  Code 103 

Total  or  -partial.     §  2757,  Civ.   Code 104 

Adjustment  of,  county  fire  insurance  companies.     §  11,  Act 120 

M 

Machinery  insurance.     (See  Boiler  and  machinery  insurance  companies.) 

Marine  insurance  companies.     (See  Insurance  companies.) 

How  classified.     §  594,  Pol.  Code 7 

Capital,  amount  of.     §  594,  Pol.   Code 7 

May  do  other  kinds  of  insurance.     §  594,  Pol.  Code 7 

Insolvent,  when.     §  602,  Pol.  Code 19 

Capital  to  be  paid  up,  how  and  when.     §  424,  Civ.  Code 48 

Property  which  may  be  insured.     §  426,  Civ.  Code 49 

Limitation  on  risks.     §  428,  Civ.  Code 49 

Dividends,  amounts  to  be  reserved  before  making.     §§  429,  430,  Civ.  Code 49 

What  is.     §  2655,  Civ.   Code 92 

Owner  of  ship  has  insurable  interest  at  all  times.     §  2659,  Civ.  Code 92 

Insurable  interest  of  owner  reduced  by  bottomry.     §  2660,  Civ.  Code 92 

Freightage,   what  is.     §2661,   Civ.   Code 92 

Owner  has  insurable  interest  in  expected  freightage.     §  2662,  Civ.  Code 93 

Interest  in  expected  freightage,  what  is.     §  2663,  Civ.  Code 93 

Insurable  interest  in  profits,  what  is.     §  2664,  Civ.  Code 93 

Insurable  interest  of  charterer.     §  2665,   Civ.   Code 93 

Information  by  each  party  must  be  communicated.     §  2669,  Civ.  Code 93 

Information  of  the  belief  or  expectation  of  a  third  person.     §  2670,  Civ.  Code  93 


INDEX.  259 

Marine  insurance  companies — Continued.  Page. 

Presumption  of  knowledge  of  loss.     §  2671,  Civ.  Code J 93 

Concealment,   effect  of.     §  2672,   Civ.   Code 93 

Concealments,   various  kinds.     §  2672,   Civ.   Code L 93 

Representation   intentionally.      §  2676.   Civ.    Code : 94 

Eventual  falsity  of  representation  as  to  expectation.     §  2677,  Civ.  Code 84 

Implied  warranty  that  ship  is  seaworthy.     §  2681,  Civ.  Code 94 

Seaworthiness,  what  is.     §  2682,  Civ.   Code 94 

Seaworthiness,   exists  when.     §2683,  Civ.   Code 94 

Seaworthiness,    requisites.      §  2684,   Civ.    Code 95 

Seaworthiness,  degrees  of  at  different  states  of.     §  2685,  Civ.  Code 95 

Unseaworthiness  during  voyage.     §  26S6,   Civ.    Code 95 

Ship  seaworthy  may  at  times  be  unseaworthy.     §  2687,  Civ.  Code 95 

Ship  to  carry  requisite  documents.     §  2688,  Civ.  Code 95 

Voyage  must  conform  to  course  fixed  by  mercantile  usage.     §  2692,  Civ.  Code  96 

Course  when  not  fixed  by  mercantile  usage.     §  2693,  Civ.  Code 96 

Course  of  voyage,  deviation  in.     §  2694,  Civ.  Code - 96 

Course,  when  proper.     §  2695,  Civ.  Code 96 

Course,  when  improper.     §  2696,  Civ.   Code 96 

Insurer,  exonerated  when.     §  2697,  Civ.  Code 96 

Total  and  partial  loss.     §  2701.  Civ.  Code 97 

Partial  loss,  what  is.     §  2702,  Civ.  Code 97 

Actual  and  constructive  total  loss.     §  2703,  Civ.  Code 97 

Actual  total  loss,  what  is.     §  2704,  Civ.  Code 97 

Constructive  total  loss,  what  is.     §2705,  Civ.  Code^ 97 

Presumed  total  loss,  what  is.     §  2706,  Civ.  Code 97 

When  master  must  transfer  cargo.     §  2707,  Civ.  Code 98 

Insurer  bound  for  damages  when  cargo  is  transferred.     §  2708,  Civ.  Code__  98 

Insurer  is  entitled  to  payment  upon  actual  total  loss.     §  2709,  Civ.  Code 98 

Average  loss.     §  2711,  Civ.  Code 98 

When  confined  in  terms  to  an  actual  total  loss.     §  2712,  Civ.  Code 98 

Abandonment,  what  is.     §  2716,  Civ.  Code 99 

Insured  may  abandon,  when.     §  2717,  Civ.  Code 99 

Abandonment  must  neither  be  partial  nor  conditional.     §  2718,  Civ.  Code 99 

Abandonment,  when  it  may  be  made.     §  2719,  Civ.  Code 99 

Abandonment,  how  becomes  ineffectual.     §  2720,   Civ.  Code 99 

Abandonment,  how  made.     §  2721,  Civ.   Code 99 

Abandonment,  requisites  of  notices  of.     §  2722,  Civ.  Code 100 

Sustained  only  upon  cause  specified.     §  2723,  Civ.   Code 100 

Abandonment  equivalent  to  transfer.     §  2724,  Civ.  Code 100 

Insurer  entitled  to  salvage,  when.     §  2725,  Civ.  Code 100 

Agents  of  the  insured  become  agents  of  the  insurer.     §  2726,  Civ.  Code 100 

Abandonment,  acceptance  of  not  necessary.     §  2727,  Civ.  Code 100 

Abandonment,  acceptance  when  conclusive.     §  2728,  Civ.  Code 100 

Abandonment  accepted,  irrevocable.     §  2729,  Civ.  Code 100 

Abandonment  of  ship  affects  freightage,  how.     §  2730,  Civ.   Code 100 

Insurer  liable  when  refuses  to  accept  valid  abandonment.     §  2731,  Civ.  Code  100 

Loss  may  be  recovered  if  insured  omits  to  abandon.     §  2732,  Civ.  Code 101 

Valuation,   when  conclusive.     §  2736,  Civ.  Code 101 

Insurer  is  liable  for  partial  loss,  when.     §  2737,  Civ.  Code 101 

Insured  is  entitled  to  profits,  when.     §  2738,  Civ.  Code 101 

Valuation  in  policy  apportioned  when  part  only  is  exposed.     §  2739,  Civ.  Code  101 
Loss  of  profits  insured  and  valuation  fixes  their  amount,  when  presumed. 

§  2740,  Civ.  Code 102 

Estimating  loss  under  an  open  policy,  rules  of.     §  2741,  Civ.  Code 102 

Cargo,  when  damaged.     §  2742,  Civ.   Code 102 

Liability  of  insurer  for  expenses  and  labor.     §  2743,  Civ.  Code 102 

Liability  of  insurer  on  contribution.     §  2744,  Civ.  Code , , 102 

Contribution,  demand  against  others  for.     §  2745,  Civ.  Code 102 

Partial  loss  of  ship  or  equipment,  depreciation.     §  2746,  Civ.  Code 103 

Medical  examinations. 

Of  members  of  fraternal  benefit  society.     §  7,  Act 132 


260  INDEX. 

Measure  of  indemnity.  Page. 

Valuation  in  policy  of  marine  insurance,  when  conclusive.     §  2736,  Civ.  Code  101 

Marine  insurer  upon  partial  loss.     §  2737,  Civ.   Code 101 

Profits.     §  2738,  Civ.   Code 101 

Valuation   apportioned.      §  2739,    Civ.   Code   101 

Valuation  applied  to  profits.     §  2740,  Civ.  Code 102 

Estimating  loss  under  open  policy.     §  2741,  Civ.  Code 102 

Arrival  of  thing  damaged.     §  2742,  Civ.  Code 102 

Labor  and  expenses.     $  2743,   Civ.   Code 102 

General  average.     §  2744,   Civ.   Code 102 

Contribution.      §  2745,    Civ.    Code    102 

One  third  new  for  old.     §  2746,  Civ.  Code 103 

In  fire  insurance  policy.     §  2756,  Civ.  Code 104 

Under  policy  of  life  or  health  insurance.     §  2766,  Civ.  Code 104 

Miscellaneous   insurance  companies. 

How  classified.     §594,   Pol.  Code 9 

Capital,  amount  of.     §  594,  Pol.  Code 9 

May  do  what  other  kind  of  insurance.     §  594,  Pol.  Code 9 

Includes   cyclone,   tornado,   windstorm   and   lightning   insurance.      §  594,    Pol. 

Code 9 

Insolvent,  when.     §  602,  Pol.  Code 19 

Mortgage  insurance  companies. 

How  classified.     §  594,  Pol.  Code 8 

Capital,  amount  of.     §  594,  Pol.  Code 8 

May  do  what  other  kinds  of  insurance.     §  594,  Pol.  Code 8 

Insolvent,   when.     §  602,   Pol.   Code 19 

Subject  to  insurance  laws  and  insurance   commissioner.     §  453ao.  Civ.  Code  66 

Policy  of  mortgage  insurance  defined.     $  453bb,   Civ.   Code 66 

Capital  stock.     §  453cc,  Civ.   Code 67 

Kind  and  amount  of  securities  that  may  be  guaranteed      §  453rfd,  Civ.  Code  67 

Legal  investments  for  trust  funds.     §  453ee,  Civ.  Code 67 

Certificate  of  insurance   commissioner  necessary.      $  453/7,   Civ.   Code 68 

Loans  and  investments.     §  453o<7,  Civ.  Code 68 

Quarterly   reports.      §  453/i/i,   Civ.   Code : 69 

Mortuary  fund.     (See  Reserve  fund;   Fraternal  benefit  societies.) 

Mutual  benefit  and  life  associations. 

Formation  of  a.     §  452a,  Civ.  Code 54 

Levying  of  assessments  of  and  limits  thereon.     §  453,  Civ.  Code 54 

Annual  payments.     §  453,  Civ.  Code 54 

Articles  of  incorporation  of.     §  452a,  Civ.  Code 54 

By-laws  of.     §  453,  Civ.  Code  54 

Members,  number  of.     §  452a,  Civ.  Code 54 

Powers  and  liabilities.     §  453,   Civ.  Code 54 

Purpose  of.     §  452a,   Civ.   Code 54 

Mutual  fire  insurance  companies.     (See  Insurance  companies.) 

May  adopt  by-laws.     §  2,  Act 123 

Policyholder  becomes  member  of  corporation.     §  3,  Act 123 

Assets  of  an  organization.     §  4,  Act 123 

Expenses,   limitation  of.     §  5,  Act 123 

Amount  of  single   risk.     §  6,   Act 124 

Admission   of  foreign   companies.      §  7,   Act 124 

May  issue  non-assessable  policies,  when.     §  8,  Act 124 

Premiums  to  be  paid  in  cash.     §  8,  Act 124 

Assessment  by.     §  9,  Act _ 125 

Withdrawal  or  cancellation  of  policy.     §  10,  Act 125 

Dividends,  when  declared.     §  11,  Act 125 

Statement,  annual,  must  be  filed.     §  12,  Act 126 

Insolvent,  when.     §  13,  Act 126 

Organization  of.     §  13,  Act .___  126 

Laws  applicable   to.     §  14,  Act 126 

Taxation  of.      §  14,   Act  126 

Mutual    insurance   companies.      (See  Mutual  fire  insurance   companies;    Mutual 
life  insurance  companies.) 

Assets  required  in  lieu  of  capital  stock.     §  594,  Pol.  Code 7 

Insolvent,  when.     §  602,  Pol.  Code 19 

Organized  under  act  of  1851,  may  report  how.     §  614,  Pol.  Code 31 


INDEX.  261 

Mutual    life   insurance  companies.      (See  Life  insurance  companies.)  Page. 

Assets   required.      §  594,    Pol.    Code 7 

Insolvent,   when.     §  602,  Pol.  Code 19 

Capital  stock,,  amount  of.     §  437,  Civ.   Code 50 

Guarantee,  fund  of.     §  437,  Civ.  Code 50 

Guarantee,   fund  of,  shall  consist  of.     §  438,  Civ.   Code 50 

Fixed  capital.     §  439,  Civ.   Code— 51 

Declaration  of  fixed  capital.     §  440,  Civ.  Code^ ! 51 

Guarantee  notes  and  interest,  how  disposed  of.     §  441,  Civ.  Code 51 

Insured  to  be  entitled  to  note,  when.     §  442,  Civ.  Code 52 

Number  of  directors  may  be  altered,  how.     §  443,  Civ.  Code 52 

By-laws  of  may  provide  protection  of  stockholders.     §  445,  Civ.  Code 52 

Premiums  of,  how  payable.     §  446,  Civ.  Code 52 

Policy  of  to  contain,  what  provisions.     §  450,  Civ.   Code 52 

Dividends  of,   how  made.     §  452,  Civ.  Code 54 

Mutual   workmen's  compensation    insurance   companies. 

Act  providing  for  organization  and  management 162 

N 

Name. 

Of  company,  commissioner  may  reject.     §  609,  Pol.  Code 27 

Nationality.   (See  Neutrality.) 

Neutrality.  « 

Shipment  must  carry  papers  of.     §  2688,  Civ.  Code 95 

Newspaper. 

Publication  of  statement  in.  §  611,  Pol.  Code 27 

Of  general  circulation.     §  611,   Pol.   Code 27 

Weekly.      §  611,   Pol.    Code   27 

Notice.     (See  Publication;  Newspapers.) 

Commissioner  must  give  on  insolvency.     8  603,  Pol.  Code 23 

Service  on  general  agent.     §  616,  Pol.  Code 31 

Notice  of  accident. 

Time  in  which  may  be  given.     §  2633«,  Civ.  Code 89 

Notice  of  loss.     (See  Loss.) 

Insurer  exonerated,  when.     §2633,   Civ.   Code 89 

Preliminary   proofs.     §  2634,   Civ.   Code 89 

Waivers  of,  defects  in.     §  2635,  Civ.   Code 89 

Waivers  of,  delay  in  presentation  of.     §  2636,  Civ.  Code 90 

Certificate  of,  when  dispensed  with.     §  2637,  Civ.  Code 90 

O 

Office. 

Expenses  of.     §  591,  Pol.   Code 6 

Office  of  insurance  commissioner  must  be  located  in  San  Francisco.     §  592, 

Pol.   Code   7 

Organization   of  insurance  companies. 

Limit  of  expenses  on.     §  597,  Pol.  Code 17 

Over-insurance.     (See  Premiums;  Marine  insurance.) 

Owner. 

Partner  or  part.     §2590,  Civ.  Code 82 

Successive.     §  2592,  Civ.  Code 82 

Transfer.     §  2593,   Civ.   Code  83 

P 

Penalty.     (See  Arson;  Crimes;  Fines.) 

For  disobedience  to  order  of  commissioner.     §  599,  Pol.  Code 19 

For  failure  to  file  annual  statement.     §  617,  Pol.  Code 33 

Payable  on  demand  of  insurance  commissioner.     §  634b,  Pol.  Code 41 

Arson.     §  455,  Pen.   Code 113 

Burning  or  destroying  property  insured.     §  548,  Pen.  Code 113 

Presenting  false  proofs  upon  policy.     §  549,  Pen.  Code 113 

Performance.      (See  Warranties.) 

When  breach  of  future — does  not  avoid  policy.     §  2609,  Civ.  Code 85 

Permit.     (See  Certificate  of  authority;  Licenses.) 


262  INDEX. 

Physician.  Page. 

Must  examine  applicants  for  membership  to  fraternal  benefit  societies.     §  7, 

Act    132 

Plate  glass  insurance  companies. 

How  classified.     §  594,  Pol.  Code " 8 

Capital,  amount  of.     §  594,  Pol.  Code S 

May  do  other  kinds  of  insurance.     §  594,  Pol.  Code 8 

Insolvent,  when.     §  602,  Pol.  Code 19 

Policy.     (See  Policies;  Policyholder.) 

Lost.     §  598,   Pol.  Code 1 '_  18 

How  issued  and  by  whom  signed.     §  416,  Civ.  Code 45 

Of  life  insurance  corporations  to  contain  what  provisions.     §  450,  Civ.  Code  52 

Defined.      §  2586,   Civ.   Code  81 

What  must  be  stated  in.     §  2587,  Civ.  Code 81 

Whose  interest  covered  by.     §  2588,  Civ.  Code 82 

By  agent  or  trustee,  insurance.     §  2589,  Civ.  Code 82 

By  part  owner,  insurance.     §  2590,  Civ.  Code 82 

General  terms.     §  2591,  Civ.  Code 82 

Successive  owners.     §  2592,   Civ.  Code 82 

Transfer  of.     §  2593,  Civ.   Code 82 

Is  opened  or  valued.     §  2594,  Civ.  Code 83 

Open,  defined.     §  2595,  Civ.  Code 83 

Value,  defined.     §  2596,  Civ.  Code 83 

Running,  defined.     §  2597,  Civ.  Code 83 

Effect  of  receipt  in.     §  2598,  Civ.  Code 83 

Agreement  not  to  transfer,  when  void.     §  2599,'  Civ.  Code 83 

Earned  premium  on,  when.     §  2616,  Civ.  Code 86 

When  entitled  to  return  of  premium.     §  2617,  Civ.  Code 86 

When  not  entitled  to  return  of  premium.     §  2618,  Civ.  Code 87 

Premium  returnable,  when.     §  2619,  Civ.  Code 87 

Policy  of  insurance. 

Insurer  must  exhibit  to  commissioner,  lost  policy.     §  598,  Pol.  Code 18 

Registration  of  life.     §  634,  Pol.  Code— 40 

Fee  for  registration  of.     §  605,  Pol.  Code , 25' 

Life,   must  contain  what  provisions.     §  450,  Civ.  Code . 52 

Policyholder. 

May  obtain  information.     §  598,  Pol.  Code 18 

Port  Wardens. 

Sales  of  wrecks  and  merchandise  for  foreign  underwriters.     §  2507,  Pol.  Code  42 

Notice  of  sale,  how  given.     §  2508,  Pol.  Code 42 

Must  not  be  interested  in  insurance.     §  2509,  Pol.  Code 43 

Premiums. 

Company  collecting  for  more  than  one  company  must  give  separate  bond 

for  each  company.     §  624,  Pol.  Code 36 

When  earned,  defined.     §  2616,  Civ.  Code 86 

Return,  defined.     §  2617,  Civ.   Code 86 

Not  allowed,  when.     §  2618,  Civ.  Code 87 

Return  of  for  fraud.     §  2619,  Civ.  Code 87 

Return  of  over-insurance  by  several  insurers,     f  2620,  Civ.  Code 87 

Contributions  to,  on  over-insurance  by  simultaneous  policies.     §  2621,   Civ. 

Code    87 

Contribution  to,  returned  on  successive  policies.     §  2622,  Civ.  Code 87 

Principal  agent.     (See  Agent,  general.) 

Process.     (See  Agent,  general;  Service  of  process.) 

Service  on  general  agent.     §  616,   Pol.  Code 31 

Profits. 

What  not  to  be  treated  as.     §  417,  Civ.  Code , 45 

When  separately  insured  what  portion  recoverable.     §  2738,  Civ.  Code 101 

Valuation  applied  to.     §  2740,  Civ.  Code 102 

Property.     (See  Real  estate;  Investments.) 

Proofs. 

Preliminary  of  loss.     §  2634,  Civ.  Code 89 

Waivers  of  defects  in  notice.     §  2635,  Civ.  Code— 89 

Delay  in  presentation  of.     §  2636,   Civ.   Code 90 

Publication.     (See  Newspapers.) 

Of  synopsis  of  annual  statement.     §  611,  Pol.  Code 27 


INDEX.  263 

Q 

Qualifications.  Page. 

Of  insurance  company  to  obtain  certificate  of  authority.     §  607,  Pol.  Code—  26 

R 

Real  estate.     (See  Property;  Investments.) 

What  a  company  may  purchase.     §  415,  Civ.  Code 1 45 

State  board  to  equalize  assessments  of.     §  27,  Act 241 

Receipt. 

Acknowledgment  of  evidence  of  payment  of  premium.     §  2598,  Civ.  Code 83 

Receiver. 

Appointment  of.     §  604,  Pol.  Code 24 

Powers  of.     §  604,  Pol.   Code 24 

For  fraternal   benefit  societies.     §  25,   Act 141 

Record. 

Insurance  commissioner  must  keep.     §  600,  Pol.  Code 19 

Registration   of  life  policies. 

How  registered.     §634,  Pol.  Code 40 

Fee  for  registering.     §  605,  Pol.   Code 25 

Deposit  of  securities  for  benefit  of.     §  634,  Pol.  Code 40 

Reinsurance. 

Of  business  by  receiver.     §  604,  Pol.  Code 24 

What  is.     §  2646,  Civ.   Code 91 

Information  must  be  communicated.     §  2647,  Civ.  Code 91 

Presumed  to  be  a  contract  of  indemnity  against  liability.     §  2648,  Civ.  Code  91 

Original  insured  has  no  interest  in.     §  2649,  Civ.  Code 91 

Renewal.     (See  Certificate  of  authority;  Certificate  of  compliance;  Licenses.) 

Representation.     (See  Concealment  and  representation;  Marine  insurance.) 

Report.     (See  Annual  report;  Annual  statement.) 

Surplus  line  broker.     §  596,  Pol.  Code r 14 

Of  company,  how  verified.     §610,  Pol.  Code 27 

Of  mutual  companies  organized  under  act  of  1851.     §  614,  Pol.  Code 31 

On  stocks  and  bonds  held  by  insurance  companies.     §  422,  Civ.  Code 47 

Insurance  commissioner  to  board  of  equalization 227 

Reserve.     (See  Reinsurance  reserve.) 

Required  of  liability  insurance  companies.     §  602a,  Pol.   Code 20 

Required  of  other  companies.     §  602,   Pol.   Code 19 

Retaliatory  law.     (See  Taxation.) 

Applying  foreign  discriminatory  law.     §622,   Pol.  Code 35 

Valuation  of  policies  of  life  insurance.     §  628,  Pol.  Code 38 

When  appliable  to  companies  of  other  states.     §3,  Act 136 

Revocation.     (See  Licenses;  Certificates  of  authority.) 

Risk. 

Limitation  on.     §  428,  Civ.   Code  ^ ;„  49 

When  alteration  increases.     §  2753,  Civ.  Code 103 

When  alteration  does  not  increase.     §  2754,  Civ.  Code ' 104 

May  be  issued  upon  what  by  county  fire  insurance  companies.     §  8,  Act___  120 

When  acts  of  insured  do  not  increase.     §  2755,  Civ.  Code 104 

County  fire  insurance  companies  must  classify.     §  9,  Act 120 

Limitations  upon,  by  county  fire  insurance  companies.     §  10,  Act 120 

S 
Seaworthiness.     (See  Marine  insurance;  Voyage.) 

Warranty  of.     §  2681,  Civ.  Code 94 

What  is.     §  2682,  Civ.  Code '____  94 

At  what  time  must  exist.     §  2683,  Civ.  Code 94 

What  things  are  required  to  constitute.     §  2684,  Civ.  Code 95 

When  a  ship  becomes  unseaworthy.     §  2686,  Civ.  Code 95 

Different  degrees  of  on  voyage.     §  2685,  Civ.  Code 95 

For  purposes  of  insurance  on  cargo.     §  2687,  Civ.  Code 95 

Salary.     (See  Compensation.)  « 

Seal  of  office. 

Fee  for  attaching.     §  605,  Pol.  Code 25 

Secret   benevolent  associations.     (See  Fraternal  benefit  societies.) 

Exempt  from  insurance.     §630,  Pol.  Code 39 


264  INDEX. 

Secretary  of  state.  Page. 

Fees  of.     §  409,  Pol.   Code 155 

Foreign  corporations.     §§408,   409,   Civ.  Code 154 

Service  on,  when  valid.     §  405,  Civ.   Code 154 

Securities.     (See  Deposit.) 

Annual  examination  of.     §  621,  Pol.  Code 34 

Service  of  process.     (See  Agents;  Process.) 

How  made  on  insurance  commissioner.     §  616,  Pol.   Code 31 

When  deemed   complete.      §  616,   Pol.   Code 31 

How  made  on  general  agent.     §  616,  Pol.  Code 31 

Sprinkler  insurance  companies.      (See  Insurance  companies.) 

How  classified.     §  594,   Pol.  Code 8 

Capital,  amount  of.     §  594,  Pol.  Code 8 

May  do  what  other  kinds  of  insurance.     §  594,  Pol.  Code 8 

Insolvent,  when.     §  602,  Pol.  Code 19 

Standard  form  of  fire  insurance  policy. 

Liability  limited.     §  1,  Act 147 

Policy  must  be  countersigned  by  agent.     §  1,  Act 147 

What  property  not  covered.     §  1,  Act 147 

What  hazards  not  covered.     §  1,  Act 147 

Policy  void,   when.     §  1,   Act 148 

Policy  suspended,  when.     §  1,  Act 148 

Insurer  not  liable,  when.     §  1,  Act 148 

Deduction  for  removal  when  endangered  by  fire.     §  1,  Act 149 

Policy  may  be  canceled,  when.     §  1,  Act 149 

Duty  of  insured  in  case  of  loss.     §  1,  Act 149 

Ascertainment  of  amount  of  loss.     §  1,  Act 150 

Options  of  company  in  case  of  loss.     §  1,  Act 150 

Apportionment  of  loss.     §  1,  Act 151 

Loss,  when  payable.     §  1,  Act 151 

Non-waiver  of*  appraisal  or  examination.     §1,  Act 151 

Subrogation.     §  1,  Act 151 

Time  for  commencement  of  action.     §  1,  Act 151 

Insured,   defined.     §  1,   Act 151 

Loss,   defined.     §  1,   Act   151 

Time  of  loss  or  damage,  defined.     §  1,  Act 151 

What  shall  be  printed  on  outside  of  policy.     §  2,  Act 151 

Apportionment  of  loss  may  be  waived,  when.     §  3,  Act 152 

Size  of  type  to  be  used.     §  4,  Act 152 

County  mutuals  need  not  use  standard  form.     §  4,  Act 152 

What  may  be  added   to  policy.     §§  6,  7,  9,  10,  Act ^ 152 

Rider  affecting  standard  form.     §  8,  Act 152 

Change  in  wording  may  be  made,  when.     §  11,  Act 153 

Deviation  from  standard  form.     §12,  Act 153 

Punishment  for  violation  of.     §  12,  Act 153 

Policy  violating  standard  form  valid  against  company.     §  12,  Act 153 

Act  effective,  when.     §  13,  Act 153 

Statement.     (See  Annual  statement;  Annual  report.) 

Must  be  made  on  basis  of  gold  coin.     §  627,  Pol.  Code 37 

State  insurance.     (See  Workmen's  compensation.) 

State  treasurer.     (See  Treasury  of  state.) 

Statutes. 

Act  of  March  26,   1868 114 

Act  to  facilitate  the  giving  of  bonds  required  by  law 117 

Act  to  require  payment  of  certain  premiums  to  counties  by  fire  insurance 

companies  not  organized  under  laws  of  state 118 

Act  to  provide  for  the  organization  and  management  of  county  fy*e  insur- 
ance  companies    118 

Act  providing  for  the  organization  and  management  of  mutual  fire  insur- 
ance   companies   123 

Act  providing  for  the  insuring  of  livestock  on  the  assessment  plan 126 

An  act  for  the  regulation  and  control  of  fraternal  benefit  societies 131 

An  act  defining  certain  classes  of  contracts  for  the  exchange  of  indemnity, 

prescribing  regulations  therefor  and  fixing  license  fee 143 


INDEX.  265 

Statutes — Continued.  Page. 

Act  to  establish  standard  form  of  fire  insurance  policy,  etc 146 

Act  to  regulate  the  organization  of  fraternal  insurance  companies 156 

Act    prohibiting   borrowing   of   money   from   an   insurance   company   by   an 

officer  of  company   158 

Act   providing   for    notice   printed    on   cover   of   policies   relating   to   future 

assessments    15S 

Act  relating  to  bonds  of  irrigation  districts _ 159 

Act    providing    for    organization    and    management    of    mutual    workmen's 

compensation  insurance   companies   162 

Employers'   liability  act  of  1911 166 

Workmen's  compensation,   insurance  and  safety  act 177 

An  act  taxing  corporations 135 

Steam   boiler  insurance.     (See  Boiler  and  machinery  insurance  companies.) 

Stipulation  for  service  of  papers. 

Fee  for  filing.     §  605,  Pol.  Code 25 

Companies  must  file.     §  616,  Pol.  Code 31 

Is  irrevocable   (note).     §  616,  Pol.  Code 31 

Stock.     (See  Capital  stock.) 

Directors  may  assess,  when.     §  331,  Civ.  Code 1 44 

Limitation  on  account  of  assessment.     §  332,  Civ.  Code 44 

Stocks. 

Report  on  stocks  and  bonds  held.     §  422,  Civ.  Code 47 

Subscriptions. 

To  capital  stock,  opened  and  how  collected.     §  414,  Civ.  Code 44 

Payment  of.     §  424,   Civ.   Code 48 

Summons.     (See  Service  of  process;  Process.) 

Sureties.     (See  Bond.) 

Of  surplus  line  broker.     §  596,  Pol.   Code 14 

Surety  company  may  be  accepted  as  sole  surety.     §  955,  Pol.  Code 41 

May  become  liable  for  less  than  full  penal  sum.     §  956,  Pol.  Code 41 

Surety  corporations. 

May  become  sureties  on  undertakings  and  bonds.  §  1056,  C.  C.  P 108 

Not   required   to  justify.     §  1057,    C.   C.   P.' 108 

May    justify,   how.      §  1057,   C.    C.    P 108 

Surety   companies.      (See   Surety  corporations;   Fidelity  and  surety  companies; 
Insurance  companies.) 

Commissioner  must  certify  list  of  to  county  clerks.     §  625a,  Pol.  Code 37 

May  be  sole  surety.     §  955,  Pol.  Code 41 

Surplus.     (See  Profits.) 

Surplus  line  broker. 

Who  is.   S  596,   Pol.  Code 14 

How  licensed.     §596,   Pol.   Code 14 

Fee.     §  596,   Pol.  Code  14 

Bond  of.     §  596,  Pol.  Code 14 

Report  of  insurance  procured,  canceled,  etc.     §  596,  Pol.  Code 14 

Annual  report.     §  596,  Pol.   Code 14 

Tax  on   premiums.     §  596,   Pol.   Code 14 

Revocation  of  license  of.     §  596,  Pol.   Code 14 

New  licenses  can  not  be  issued,  when.     §  596,  Pol.  Code 14 

Surplus  line  law.     (See  Surplus  line  broker.) 

T 

Tables  of  mortality. 

In  determining  solvency  of  life  company.     §  602,  Pol.  Code 19 

Valuation  of  policies  of  life  insurance.     §  629,  Pol.  Code 38 

Of  fraternal  benefit  societies.     §  5,  Act 131 

Rates  of  fraternal  benefit  societies  must  be  based  on  what.     §  12,  Act 133 

Taxation.     (See  Taxes.) 

Of  insurance  companies.     §  622,   Pol.   Code 35 

What  are  subject  to.     §  1,   Act 219 

Of  insurance  companies.     §  3,  Act 220 

Rate  of.     §  3,  Act 220 

Retaliatory  provision.     §  3,  Act 220 

is  -10098 


266  INDEX. 

Taxation — Continued.  Page. 

Deductions  allowed.     §  3,  Act 220 

Insurance  commissioner  must  report,  what.     §  11,  Act 227 

To  be  paid  to  state  treasurer.     §  22,  Act 235 

Protest  of.     §  23,  Act  236 

Controller  to  send  notice  of.     §  24,  Act 237 

Of  inter-insurance  associations.     §  8,  Act 223 

Taxes.     (See  Taxation.) 

Surplus  line.   §  596,   Pol.   Code 14 

Must  be  paid  on  basis  of  gold  coin.     §  627,  Pol.  Code 37 

Payable  on  demand  of  insurance  commissioner.     §  634b,  Pol.  Code 41 

Commissioner  may  commence  action  for.     §  634&,  Pol.   Code 41 

Rate   of.      §  3,   Act   220 

Application  of  retaliatory  law.     §  3,  Act 220 

When  a  lien,  and  when  attach 235 

Penalty  for  continuing  business,  on  nonpayment  of,  a  misdemeanor 238 

Team  and  vehicle  insurance  companies.     (See  Insurance  companies.) 

How  classified.     §  594,  Pol.  Code 8 

Capital,  amount  of.     §  594,  Pol.  Code 8 

May  do  what  other  kinds  of  insurance.     §  594,  Pol.  Code 8 

Insolvent,  when.     §  602,   Pol.   Code 19 

Term  of  office.     (See  Insurance  commissioner.) 

Title   insurance  companies. 

How  classified.     §  594,   Pol.   Code 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

May  do  other  kinds  of  insurance.     §  594,  Pol.   Code 7 

Insolvent,   when.     §  602,   Pol.   Code 19 

Title  insurance  corporations. 

Subject  to  insurance  laws  and  to  insurance  commissioner.     §  453s,  Civ.  Code  62 

Guarantee  fund  and  investments.     §  453f,  Civ.  Code 63 

Title  insurance  surplus  fund.     §  453w,  Civ.  Code 64 

Policy  of  title  insurance  defined.     §  453v,  Civ.  Code 64 

May  guarantee  notes  and  bonds.     §  453u>,  Civ.  Code 64 

Combined  title  insurance  and  trust  company.     §  453ar,  Civ.  Code 65 

Certificate  of  insurance  commissioner  necessary.     §  453j/,  Civ.  Code 65 

Loans  to  officers  or  employees  unlawful.     §  4532,  Civ.  Code 66 

Tornado   insurance.     (See  Miscellaneous  insurance  companies.) 

Treasurer.     (See  Treasury  of  state.) 

Treasury  of  state. 

Secxirities  must  be  deposited  in.     §  594a,  Pol.  Code 11 

Taxes  payable  to.     §  22,  Act 235 

Trustees. 

Insurance  by  agent  or.     §  2589,  Civ.  Code 82 

U 

Undertaking.     (See  Bond;  Surety  corporations.) 

Underwriters.     (See  Fire  patrol.) 

Unseaworthy.     (See  Seaworthy;  Marine  insurance.) 

Unreasonable  delay  in  repairing  exonerates  insurer.     §  2686,  Civ.  Code 95 

V 

Valuations. 

Commissioner  may  employ  actuary  to  make.     §  601,  Pol.  Code 19 

Retaliatory  provisions  as  to.     §  628,   Pol.  Code 38 

Companies  must  furnish  data  for.     §  629,  Pol.  Code 38 

Upon  what  tables  of  mortality.     §  629,   Pol.  Code 38 

Of  stocks  and  bonds  held  by  insurance  companies.     §  422,  Civ.  Code 47 

Of  policies  of  fraternal  benefit  societies.     §  23,  Act 138 

Voyage.     (See  Marine  insurance;  Deviation.) 


INDEX.  267 


w 

Warranties.  Page. 

Is  expressed  or  implied.     §  2603,  Civ.  Code 84 

Form  of.     §  2604,   Civ.   Code 84 

Express,  must  be  in  policy.     §  2605,   Civ.  Code 84 

May  relate  to  past,  present  or  future.     §  2606,  Civ.  Code 84 

Past  or  present,  defined.     §  2607,  Civ.  Code 84 

Future,  defined.     §  2608,  Civ.  Code 85 

Breach  of  future.     §  2609,  Civ.  Code 85 

Breach  of,  avoids  policy.     §  2610,  Civ.  Code 85 

Breach  of  immaterial  provision.     §  2611,  Civ.  Code 85 

Warden.     (See  Port  warden.) 

Wind   storm   insurance.      (See  Miscellaneous  insurance  companies.) 

Withdrawal   of  companies. 

Proceedings  on.     §  595,   Pol.   Code '. 12 

Publication  of  notice  of.     §  631a,   Pol.   Code 39 

Workmen's  collective  insurance.     (See  Miscellaneous  insurance.) 

Workmen's  compensation. 

Acts  of  1911  and  1913 166,177 

Workmen's  compensation   insurance  companies.     (See  Mutual  workmen's  com- 
pensation insurance  companies.) 

Wrecks.     (See  Marine  insurance.) 

Sale  of,  by  port  wardens.     §  2507,  Pol.  Code - 42 

Notice  of  sale,  how  given.     §  2508,  Pol.  Code 42 


